[Appendix, Budget of the United States Government, Fiscal Year 1998]
[Page 899-919]

 
                    VETERANS BENEFITS ADMINISTRATION

                              Federal Funds

General and special funds:

                       [Compensation and Pensions]

    [For the payment of compensation benefits to or on behalf of 
veterans as authorized by law (38 U.S.C. 107, chapters 11, 13, 51, 53, 
55, and 61); pension benefits to or on behalf of veterans as authorized 
by law (38 U.S.C. chapters 15, 51, 53, 55, and 61; 92 Stat. 2508); and 
burial benefits, emergency and other officers' retirement pay, adjusted-
service credits and certificates, payment of premiums due on commercial 
life insurance policies guaranteed under the provisions of Article IV of 
the Soldiers' and Sailors' Civil Relief Act of 1940, as amended, and for 
other benefits as authorized by law (38 U.S.C. 107, 1312, 1977, and 
2106, chapters 23, 51, 53, 55, and 61; 50 U.S.C. App. 540-548; 43 Stat. 
122, 123; 45 Stat. 735; 76 Stat. 1198); $18,671,259,000, to remain 
available until expended: Provided, That not to exceed $26,417,000 of 
the amount appropriated shall be reimbursed to ``General operating 
expenses'' and ``Medical care'' for necessary expenses in implementing 
those provisions authorized in the Omnibus Budget Reconciliation Act of 
1990, and in the Veterans' Benefits Act of 1992 (38 U.S.C. chapters 51, 
53, and 55), the funding source for which is specifically provided as 
the ``Compensation and pensions'' appropriation: Provided further, That 
such sums as may be earned on an actual qualifying patient basis, shall 
be reimbursed to ``Medical facilities revolving fund'' to augment the 
funding of individual medical facilities for nursing home care provided 
to pensioners as authorized by the Veterans' Benefits Act of 1992 (38 
U.S.C. chapter 55).
    For an additional amount for ``Compensation and Pensions'', 
$100,000,000, to be made available upon enactment of this Act, to remain 
available until expended.]

    Activities formerly included in this account are proposed to be 
financed by three separate appropriation accounts in 1998 and are 
presented below in the ``Compensation'', ``Pensions'', and ``Burial 
benefits and miscellaneous assistance'' accounts. Amounts for 1996, 
1997, and 1998 are shown on a comparable basis. The following table 
shows the distribution of the amounts (dollars in millions) appropriated 
in 1996 and 1997 and requested in 1998.

                                     1996 actual  1997 est.   1998 est.
Distribution of budget authority by 
    account:
  Compensation......................      15,415      16,163      16,438
  Pensions..........................       3,074       3,145       3,184
  Burial benefits...................         114         117         119
Distribution of outlays by account:
  Compensation......................      14,222      16,160      16,436
  Pensions..........................       2,834       3,141       3,177
  Burial benefits...................         114         117         119

                                <F-dash>

                              Compensation

    For the payment of compensation benefits to or on behalf of veterans 
and a pilot program for disability examinations as authorized by law, 
$16,437,688,000, to remain available until expended, of which not to 
exceed $2,083,000 shall be reimbursed to ``General operating expenses'' 
for necessary expenses as authorized by chapters 11, 13, 18, 51, 53, 55 
and 61 of title 38, United States Code.
    For the payment, after June 30 of the current fiscal year, of 
compensation benefits to or on behalf of veterans as authorized by law, 
for unanticipated costs incurred for the current fiscal year, such sums 
as may be necessary. (38 U.S.C. 107, and chapters 11, 13, and 61.)

               Program and Financing (in millions of dollars)

----------------------------------------------------------------------------
Identification code 36-0153-0-1-701      1996 actual   1997 est.   1998 est.
----------------------------------------------------------------------------

    Obligations by program activity:
      Compensation:

        Veterans:
00.02     World War I...................           3           2           2
00.03     World War II..................       3,421       3,201       3,168
00.04     Korean conflict...............       1,160       1,128       1,166
00.05     Vietnam era...................       4,722       4,846       5,286
00.06     Peacetime service.............       2,479       2,534       2,773
00.07     Persian Gulf conflict.........         467         569         708
                                           ---------   ---------  ----------
00.91       Total veterans..............      12,252      12,280      13,103
        Survivors:
01.04     World War I...................          63          52          46
01.05     World War II..................       1,279       1,232       1,274
01.06     Korean conflict...............         382         374         393
01.07     Vietnam era...................         928         951       1,043
01.08     Peacetime service.............         452         432         442
01.09     Persian Gulf conflict.........          45          51          60
                                           ---------   ---------  ----------
01.91       Total survivors.............       3,149       3,092       3,258
02.01   Clothing allowance..............          37          36          38
                                           ---------   ---------  ----------
02.93     Total compensation............      15,437      15,409      16,399
      Children:

03.02   Vietnam Era.....................                                  18
03.03   Ch 18 Voc Rehab.................                                   3
                                           ---------   ---------  ----------
03.91     Total Children................                                  21
09.01 Payment to general operating 
        expenses........................           2           2           2
09.02 Medical Exam Pilot Program........                       8          16
                                           ---------   ---------  ----------
09.91   Total other.....................           2          10          18
                                           ---------   ---------  ----------
10.00   Total obligations (object class 
          42.0).........................      15,440      15,418      16,438
----------------------------------------------------------------------------

    Budgetary resources available for obligation:
21.40 Unobligated balance available, 
        start of year: Uninvested 
        balance.........................          33           8
22.00 New budget authority (gross)......      15,415      15,410      16,438
                                           ---------   ---------  ----------
23.90   Total budgetary resources 
          available for obligation......      15,448      15,418      16,438
23.95 New obligations...................     -15,440     -15,418     -16,438
24.40 Unobligated balance available, end 
        of year: Uninvested balance.....           8
----------------------------------------------------------------------------

    New budget authority (gross), detail:
40.00 Appropriation.....................      15,275      15,564      16,438
41.00 Transferred to other accounts.....                    -154
42.00 Transferred from other accounts...         140
                                           ---------   ---------  ----------
43.00   Appropriation (total)...........      15,415      15,410      16,438
                                           ---------   ---------  ----------
70.00   Total new budget authority 
          (gross).......................      15,415      15,410      16,438
----------------------------------------------------------------------------

[[Page 900]]



    Change in unpaid obligations:
72.40 Unpaid obligations, start of year: 
        Obligated balance: Appropriation          13       1,232       1,243
73.10 New obligations...................      15,440      15,418      16,438
73.20 Total outlays (gross).............     -14,222     -15,407     -16,436
74.40 Unpaid obligations, end of year: 
        Obligated balance: Appropriation       1,232       1,243       1,245
----------------------------------------------------------------------------

    Outlays (gross), detail:
86.90 Outlays from new current authority      14,176      14,175      15,193
86.93 Outlays from current balances.....          46       1,232       1,243
                                           ---------   ---------  ----------
87.00   Total outlays (gross)...........      14,222      15,407      16,436
----------------------------------------------------------------------------

    Net budget authority and outlays:
89.00 Budget authority..................      15,415      15,410      16,438
90.00 Outlays...........................      14,222      15,407      16,436
---------------------------------------------------------------------------

                 Summary of Budget Authority and Outlays

                        (in millions of dollars)

                                     1996 actual  1997 est.   1998 est.
Enacted/requested:
  Budget Authority..................      15,415      15,410      16,438
  Outlays...........................      14,222      15,407      16,436
Supplemental proposal:
  Budget Authority..................                     753
  Outlays...........................                     753
Legislative proposal, not subject to 
    PAYGO:
  Budget Authority..................                                 331
  Outlays...........................                                 298
Legislative proposal, subject to 
    PAYGO:
  Budget Authority..................                                 -17
  Outlays...........................                                 -17
                                    ------------------------------------
Total:
  Budget Authority..................      15,415      16,163      16,752
  Outlays...........................      14,222      16,160      16,717
                                    ====================================

    This appropriation would provide for the payment of compensation 
benefits to veterans and survivors. Compensation is paid to veterans for 
disabilities incurred in or aggravated during active military service. 
Dependency and Indemnity Compensation is paid to survivors of 
servicepersons or veterans whose death occurred while on active duty or 
as a result of service-connected disabilities. Compensation and 
vocational rehabilitation is provided to the children of Vietnam 
veterans who were born with the birth defect spina bifida.

    The Secretary may pay a clothing allowance to each veteran who uses 
a prescribed medication for a service-connected skin condition, or wears 
a prosthetic or orthopedic appliance (including a wheelchair) which, in 
the judgment of the Secretary, tends to damage or tear the clothing of 
such veteran.

    Caseload and cost tables shown below do not include proposed 
legislation.

            AVERAGE NUMBER OF COMPENSATION CASES AND PAYMENTS

                                     1996 actual  1997 est.   1998 est.
Veterans:
  Mexican border period.............          11          11           9
  World War I.......................         483         330         230
  World War II......................     671,110     634,900     595,700
  Korean conflict...................     188,427     184,700     180,700
  Vietnam era.......................     709,079     719,659     729,461
  Peacetime service.................     522,233     539,300     558,800
  Persian Gulf conflict.............     151,764     184,600     217,200
                                    ------------------------------------
      Total.........................   2,243,107   2,263,500   2,282,100
  Average payment per case, per year      $5,462      $5,692      $5,741
      Total obligations (in 
        millions)...................     $12,252     $12,883     $13,102
                                    ====================================
Children of Vietnam era veterans:
  Children..........................                               2,000
  Average payment per case, per year                              $9,219
      Total obligations (in 
        millions)...................                                 $18
Chapter 18 Vocational 
    rehabilitations:
  Rehabilitations...................                                 860
  Average payment per case, per year                              $3,095
      Total obligations (in 
        millions)...................                                  $3
Survivors:
  Prior to Spanish-American War.....           1           1           1
  Spanish-American War..............          19          14          10
  Mexican border period.............           2           2           2
  World War I.......................       6,232       5,254       4,431
  World War II......................     124,731     122,057     119,530
  Korean conflict...................      37,250      37,093      36,967
  Vietnam era.......................      89,636      93,182      96,812
  Peacetime service.................      44,766      43,677      42,620
  Persian Gulf conflict.............       3,604       4,120       4,627
                                    ------------------------------------
      Total.........................     306,241     305,400     305,000
  Average payment per case, per year     $10,286      10,609      10,683
      Total obligations (in 
        millions)...................      $3,150       3,240       3,258
                                    ====================================
Clothing allowance:
  Number of veterans................      73,102      73,700      74,300
  Average payment per case, per year        $503         518         518
      Total obligations (in 
        millions)...................         $37         $37         $38
                                    ====================================

                                <F-dash>

                              Compensation

              (Legislative proposal, not subject to PAYGO)

               Program and Financing (in millions of dollars)

----------------------------------------------------------------------------
Identification code 36-0153-2-1-701      1996 actual   1997 est.   1998 est.
----------------------------------------------------------------------------

    Obligations by program activity:
      Compensation:

        Veterans:
00.03     World War II..................                                  63
00.04     Korean conflict...............                                  23
00.05     Vietnam era...................                                 106
00.06     Peacetime service.............                                  56
00.07     Persian Gulf conflict.........                                  14
                                           ---------   ---------  ----------
00.91       Total veterans..............                                 262
        Survivors:
01.04     World War I...................                                   1
01.05     World War II..................                                  27
01.06     Korean conflict...............                                   8
01.07     Vietnam era...................                                  22
01.08     Peacetime service.............                                   9
01.09     Persian Gulf conflict.........                                   1
                                           ---------   ---------  ----------
01.91       Total survivors.............                                  68
02.01   Clothing allowance..............                                   1
                                           ---------   ---------  ----------
02.93     Total compensation............                                 331
                                           ---------   ---------  ----------
10.00   Total obligations (object class 
          42.0).........................                                 331
----------------------------------------------------------------------------

    Budgetary resources available for obligation:
22.00 New budget authority (gross)......                                 331
23.95 New obligations...................                                -331
----------------------------------------------------------------------------

    New budget authority (gross), detail:
40.00 Appropriation.....................                                 331
----------------------------------------------------------------------------

    Change in unpaid obligations:
72.40 Unpaid obligations, start of year: 
        Obligated balance: Appropriation
73.10 New obligations...................                                 331
73.20 Total outlays (gross).............                                -298
74.40 Unpaid obligations, end of year: 
        Obligated balance: Appropriation                                  33
----------------------------------------------------------------------------

    Outlays (gross), detail:
86.90 Outlays from new current authority                                 298
86.93 Outlays from current balances.....
                                           ---------   ---------  ----------
87.00   Total outlays (gross)...........                                 298
----------------------------------------------------------------------------

    Net budget authority and outlays:
89.00 Budget authority..................                                 331
90.00 Outlays...........................                                 298
---------------------------------------------------------------------------

    Legislation will be proposed to provide a cost-of-living adjustment 
(COLA) to all compensation beneficiaries including spouses and children. 
This increase, effective December 1,

[[Page 901]]

1997, is expected to be 2.7 percent and cost $331 million in fiscal year 
1998.

                                <F-dash>

                              Compensation

                (Legislative proposal, subject to PAYGO)

----------------------------------------------------------------------------
Identification code 36-0153-4-1-701      1996 actual   1997 est.   1998 est.
----------------------------------------------------------------------------

    Obligations by program activity:
      Compensation:

        Veterans:
00.03     COLA Round down...............                                 -17
                                           ---------   ---------  ----------
02.93     Total compensation............                                 -17
                                           ---------   ---------  ----------
10.00   Total obligations (object class 
          42.0).........................                                 -17
----------------------------------------------------------------------------

    Budgetary resources available for obligation:
22.00 New budget authority (gross)......                                 -17
23.95 New obligations...................                                  17
----------------------------------------------------------------------------

    New budget authority (gross), detail:
40.00 Appropriation.....................                                 -17
----------------------------------------------------------------------------

    Change in unpaid obligations:
73.10 New obligations...................                                 -17
73.20 Total outlays (gross).............                                  17
----------------------------------------------------------------------------

    Outlays (gross), detail:
86.90 Outlays from new current authority                                 -17
----------------------------------------------------------------------------

    Net budget authority and outlays:
89.00 Budget authority..................                                 -17
90.00 Outlays...........................                                 -17
---------------------------------------------------------------------------

    This legislative proposal would provide for a permanent round down 
of the annual COLA increase.

    Legislation will also be proposed to deny service connection for 
disability or death due to an injury or disease resulting from tobacco 
use while on active duty which becomes manifest after service discharge 
and beyond any applicable presumptive period.

                                <F-dash>

                                Pensions

    For the payment of pension benefits to or on behalf of veterans as 
authorized by law, $3,178,055,000, to remain available until expended; 
of which not to exceed $24,297,000 shall be reimbursed to ``General 
operating expenses'' and ``Medical care'' for necessary expenses as 
authorized by chapters 51, 53, 55, and 61 of title 38, United States 
Code; and of which such sums as may be earned on an actual qualifying 
patient basis, shall be reimbursed to ``Medical facilities revolving 
fund'' to augment the funding of individual medical facilities for 
nursing home care provided to pensioners as authorized by chapter 55.
    For the payment, after June 30 of the current fiscal year, of 
pension benefits to or on behalf of veterans as authorized by law, for 
unanticipated costs incurred for the current fiscal year, such sums as 
may be necessary. (38 U.S.C. chapters 15 and 61.)

               Program and Financing (in millions of dollars)

----------------------------------------------------------------------------
Identification code 36-0154-0-1-701      1996 actual   1997 est.   1998 est.
----------------------------------------------------------------------------

    Obligations by program activity:
      Direct program:

        Pensions:
          Veterans:
04.01       Improved law................       2,184       2,268       2,331
04.02       Prior law...................          78          66          56
04.03       Old law.....................           1           1
                                           ---------   ---------  ----------
04.91         Total veterans............       2,263       2,335       2,387
          Survivors:
05.01       Improved law................         673         666         659
05.02       Prior law...................         127         115         104
05.03       Old law.....................           2           2           2
                                           ---------   ---------  ----------
05.91         Total survivors...........         802         783         765
                                           ---------   ---------  ----------
06.93       Total pensions..............       3,065       3,118       3,152
        Other expenses:
07.01     Medical facility expenses.....           2           2           2
07.02     Reimbursement to GOE and VHA..          19          24          24
                                           ---------   ---------  ----------
07.91       Total other expenses........          21          26          26
                                           ---------   ---------  ----------
08.00     Total direct program..........       3,086       3,144       3,178
      Reimbursable program:

09.01   Minimum income for widows 
          program.......................                       1           6
                                           ---------   ---------  ----------
10.00   Total obligations...............       3,086       3,145       3,184
----------------------------------------------------------------------------

    Budgetary resources available for obligation:
22.00 New budget authority (gross)......       3,074       3,145       3,184
22.22 Unobligated balance transferred 
        from other accounts.............          12
                                           ---------   ---------  ----------
23.90   Total budgetary resources 
          available for obligation......       3,086       3,145       3,184
23.95 New obligations...................      -3,086      -3,145      -3,184
24.40 Unobligated balance available, end 
        of year: Uninvested balance.....
----------------------------------------------------------------------------

    New budget authority (gross), detail:
      Current:

40.00   Appropriation...................       3,044       2,989       3,178
41.00   Transferred to other accounts...        -160
42.00   Transferred from other accounts.         190         155
                                           ---------   ---------  ----------
43.00     Appropriation (total).........       3,074       3,144       3,178
      Permanent:

68.00   Spending authority from 
          offsetting collections: 
          Offsetting collections (cash).                       1           6
                                           ---------   ---------  ----------
70.00   Total new budget authority 
          (gross).......................       3,074       3,145       3,184
----------------------------------------------------------------------------

    Change in unpaid obligations:
72.40 Unpaid obligations, start of year: 
        Obligated balance: Appropriation           3         254         258
73.10 New obligations...................       3,086       3,145       3,184
73.20 Total outlays (gross).............      -2,834      -3,141      -3,183
74.40 Unpaid obligations, end of year: 
        Obligated balance: Appropriation         254         258         260
----------------------------------------------------------------------------

    Outlays (gross), detail:
86.90 Outlays from new current authority       2,831       2,886       2,919
86.93 Outlays from current balances.....           3         254         258
86.97 Outlays from new permanent 
        authority.......................                       1           6
86.98 Outlays from permanent balances...
                                           ---------   ---------  ----------
87.00   Total outlays (gross)...........       2,834       3,141       3,183
----------------------------------------------------------------------------

    Offsets:
      Against gross budget authority and outlays:

88.00   Offsetting collections (cash) 
          from: Federal sources.........                      -1          -6
----------------------------------------------------------------------------

    Net budget authority and outlays:
89.00 Budget authority..................       3,074       3,144       3,178
90.00 Outlays...........................       2,834       3,140       3,177
---------------------------------------------------------------------------

    Pension benefits may be paid to veterans or their survivors. A 
veteran's entitlement is based on active duty service of a specific 
length (normally 90 days or more) during a designated war period, 
disabilities considered permanent and total, and countable income below 
established levels. There is no disability requirement for survivor 
cases. Income support is provided at established benefit levels.

    Veterans who are under the age of 45 and are in receipt of a 
disability pension will be evaluated to determine whether a vocational 
goal is reasonably feasible. Those for whom a vocational goal is 
feasible are eligible for a program of vocational training.

    An automatic annual cost-of-living increase comparable to the annual 
social security increase is provided for those pensioners in the 
improved program and to parents receiving dependency and indemnity 
compensation. The increase, effective with payments made on January 1, 
1998, is expected to be 2.7 percent.

[[Page 902]]

              AVERAGE NUMBER OF PENSION CASES AND PAYMENTS

                                     1996 actual  1997 est.   1998 est.
Veterans:
  Improved law......................     373,947     373,577     373,693
  Prior law.........................      49,134      41,892      35,758
  Old law and service...............         636         531         449
                                    ------------------------------------
      Total.........................     423,717     416,000     409,900
  Average payment per case, per year      $5,338      $5,610      $5,821
                                    ------------------------------------
      Total obligations (in 
        millions)...................      $2,262      $2,334      $2,386
                                    ====================================
Survivors:
  Improved law......................     209,467     203,349     197,865
  Prior law.........................     128,367     115,169     103,504
  Old law and service...............       3,855       3,182       2,631
                                    ------------------------------------
      Total.........................     341,689     321,700     304,000
  Average payment per case, per year      $2,349      $2,434      $2,517
                                    ------------------------------------
      Total obligations (in 
        millions)...................         803         783         765
                                    ====================================
Minimum Income for Widows Program:
  Widows............................                     800         793
Average benefit per case, per year..                  $1,736      $7,133
                                    ------------------------------------
      Total obligations (in 
        millions)...................                      $1          $6
Vocational training:
  Trainees..........................         136         110          85
  Average benefit per year..........      $2,625      $2,700      $2,776
                                    ------------------------------------
      Total obligations (in 
        millions) <SUP>1............
                                    ====================================
    1 Amounts round to less than $1 million.

               Object Classification (in millions of dollars)

----------------------------------------------------------------------------
Identification code 36-0154-0-1-701      1996 actual   1997 est.   1998 est.
----------------------------------------------------------------------------
42.0  Direct obligations: Insurance 
        claims and indemnities..........       3,086       3,144       3,178
99.0  Reimbursable obligations: 
        Subtotal, reimbursable 
        obligations.....................                       1           6
                                           ---------   ---------  ----------
99.9    Total obligations...............       3,086       3,145       3,184
---------------------------------------------------------------------------

    The Administration is proposing legislation which will make 
permanent two provisions of the Omnibus Budget Reconciliation Act of 
1993 due to expire at the end of 1998: (1) authorization of VA access to 
certain Internal Revenue Service data for determining eligibility for 
veterans pension benefits; and (2) limiting pension benefits to 
Medicaid-eligible beneficiaries in nursing homes.

                                <F-dash>

              Burial Benefits and Miscellaneous Assistance

    For the payment of burial benefits, emergency and other officers' 
retirement pay, adjusted-service credits and certificates, payment of 
premiums due on commercial life insurance policies guaranteed under 
Article IV of the Soldiers' and Sailors' Civil Relief Act of 1940, as 
amended, and for other benefits as authorized by law, $119,300,000, to 
remain available until expended. (38 U.S.C. 107, 1312, 1977, and 2106, 
chapters 23, 51, 53, 55, and 61; 50 U.S.C. App. 540-548; 43 Stat. 122, 
123; 45 Stat. 735; Stat. 76 Stat. 1198.) (Departments of Veterans 
Affairs and Housing and Urban Development, and Independent Agencies 
Appropriations Act, 1997.)

               Program and Financing (in millions of dollars)

----------------------------------------------------------------------------
Identification code 36-0155-0-1-701      1996 actual   1997 est.   1998 est.
----------------------------------------------------------------------------

    Obligations by program activity:
      Burial benefits:

07.01   Burial allowances...............          35          35          35
07.02   Burial plots....................          12          12          11
07.03   Service-connected deaths........          12          12          12
07.04   Burial flags....................          16          17          18
07.05   Headstones and markers..........          29          30          31
07.07   Outer burial receptacles........           8           9          10
                                           ---------   ---------  ----------
07.91     Total burial benefits.........         112         115         117
08.03 Special allowance dependents......           1           1           1
08.04 Equal access to justice...........           1           1           1
                                           ---------   ---------  ----------
08.91   Total miscellaneous assistance..           2           2           2
                                           ---------   ---------  ----------
10.00   Total obligations (object class 
          42.0).........................         114         117         119
----------------------------------------------------------------------------

    Budgetary resources available for obligation:
22.00 New budget authority (gross)......         114         117         119
23.95 New obligations...................        -114        -117        -119
----------------------------------------------------------------------------

    New budget authority (gross), detail:
40.00 Appropriation.....................         112         118         119
41.00 Transferred to other accounts.....                      -1
42.00 Transferred from other accounts...           2
                                           ---------   ---------  ----------
43.00   Appropriation (total)...........         114         117         119
                                           ---------   ---------  ----------
70.00   Total new budget authority 
          (gross).......................         114         117         119
----------------------------------------------------------------------------

    Change in unpaid obligations:
73.10 New obligations...................         114         117         119
73.20 Total outlays (gross).............        -114        -117        -119
----------------------------------------------------------------------------

    Outlays (gross), detail:
86.90 Outlays from new current authority         114         117         119
----------------------------------------------------------------------------

    Net budget authority and outlays:
89.00 Budget authority..................         114         117         119
90.00 Outlays...........................         114         117         119
---------------------------------------------------------------------------

    Burial benefits.--Provides for: (a) the payment of an allowance of 
$300 (plus transportation charges where death occurs under VA care) to 
reimburse, in part, the burial and funeral expense of an eligible 
deceased veteran; (b) the payment of $150 for a plot allowance where an 
eligible veteran is not buried in a national cemetery or other cemetery 
under the jurisdiction of the United States; (c) the payment of a burial 
allowance up to $1,500 when a veteran dies as the result of service-
connected disability; (d) furnishing a flag to drape the casket of each 
deceased veteran entitled thereto; (e) furnishing a headstone or marker 
for the grave of a veteran and, in certain cases, eligible dependents; 
and (f) authority to provide outer burial receptacles in the National 
Cemetery System.

                        NUMBER OF BURIAL BENEFITS

                                     1996 actual  1997 est.   1998 est.
Burial allowance....................      90,775      88,400      88,200
Burial plot.........................      80,715      77,000      73,500
Service-connected death.............       9,262       9,400       9,500
Burial flags........................     439,752     448,800     457,200
Headstone markers...................     319,758     326,000     332,000
Headstone allowance.................          14          10
Outer burial receptacles............      47,220      51,734      52,354

    Miscellaneous assistance.--Provides for: (a) payments to emergency 
officers of World War I and certain officers of the Regular 
Establishment who have retired because of service-connected disability; 
(b) payments for claims made pursuant to the provision of the World War 
Adjusted Compensation Act of 1924, as amended; (c) a special allowance 
(38 U.S.C. 1312) to dependents of certain veterans who died after 
December 31, 1956, but who were not fully and currently insured under 
the Social Security Act; and (d) payments authorized by the Equal Access 
to Justice Act.

                    MISCELLANEOUS ASSISTANCE CASELOAD

                                     1996 actual  1997 est.   1998 est.
Retired Officers....................           4           3           2
Adjusted service and dependence pay.
Special allowance dependents........         152         152         152
Equal Access to Justice payments....         206         220         220

                                <F-dash>

                          Readjustment Benefits

    For the payment of readjustment and rehabilitation benefits to or on 
behalf of veterans as authorized by 38 U.S.C. chapters 21,

[[Page 903]]

30, 31, 34, 35, 36, 39, 51, 53, 55, and 61, [$1,377,000,000] 
$1,366,000,000, to remain available until expended: Provided, That funds 
shall be available to pay any court order, court award or any compromise 
settlement arising from litigation involving the vocational training 
program authorized by section 18 of Public Law 98-77, as amended. 
(Departments of Veterans Affairs and Housing and Urban Development, and 
Independent Agencies Appropriations Act, 1997.)

               Program and Financing (in millions of dollars)

----------------------------------------------------------------------------
Identification code 36-0137-0-1-702      1996 actual   1997 est.   1998 est.
----------------------------------------------------------------------------

    Obligations by program activity:
      Direct program:

        Education and training:
00.01     Sons and daughters............          91          94          96
00.02     Spouses.......................          10          11          12
                                           ---------   ---------  ----------
00.91       Total education and training         101         105         108
        Special assistance to disabled 
            veterans:
01.01     Vocational rehabilitation.....         355         358         341
01.02     Housing grants................          14          14          14
01.03     Automobiles, adaptive 
            equipment, maintenance and 
            repair......................          27          27          28
                                           ---------   ---------  ----------
01.91       Total special assistance to 
              disabled veterans.........         396         399         383
02.01   Work study......................          26          26          28
02.02   Payments to states..............          13          13          13
02.03   All-volunteer assistance: 
          Veterans' basic benefits......         689         805         880
                                           ---------   ---------  ----------
02.91     All-volunteer assistance and 
            other.......................         728         844         921
                                           ---------   ---------  ----------
02.93     Total direct program..........       1,225       1,348       1,412
      Reimbursable program:

03.01   Veterans' basic benefits........          14          14          11
03.02   Veterans' supplementary benefits          74          72          70
03.03   Reservists benefits.............          95          98          99
                                           ---------   ---------  ----------
03.91     Total reimbursables...........         183         184         180
                                           ---------   ---------  ----------
10.00   Total obligations...............       1,408       1,532       1,592
----------------------------------------------------------------------------

    Budgetary resources available for obligation:
21.40 Unobligated balance available, 
        start of year: Uninvested 
        balance.........................          93          27          46
22.00 New budget authority (gross)......       1,338       1,561       1,546
22.10 Resources available from 
        recoveries of prior year 
        obligations.....................           9          10
22.30 Unobligated balance expiring......          -5         -21
                                           ---------   ---------  ----------
23.90   Total budgetary resources 
          available for obligation......       1,435       1,577       1,592
23.95 New obligations...................      -1,408      -1,532      -1,592
24.40 Unobligated balance available, end 
        of year: Uninvested balance.....          27          46
----------------------------------------------------------------------------

    New budget authority (gross), detail:
      Current:

40.00   Appropriation...................       1,345       1,377       1,366
41.00   Transferred to other accounts...        -190
                                           ---------   ---------  ----------
43.00     Appropriation (total).........       1,155       1,377       1,366
      Permanent:

68.00   Spending authority from 
          offsetting collections: 
          Offsetting collections (cash).         183         184         180
                                           ---------   ---------  ----------
70.00   Total new budget authority 
          (gross).......................       1,338       1,561       1,546
----------------------------------------------------------------------------

    Change in unpaid obligations:
72.40 Unpaid obligations, start of year: 
        Obligated balance: Appropriation          51          54          50
73.10 New obligations...................       1,408       1,532       1,592
73.20 Total outlays (gross).............      -1,396      -1,526      -1,589
73.45 Adjustments in unexpired accounts.          -9         -10
74.40 Unpaid obligations, end of year: 
        Obligated balance: Appropriation          54          50          53
----------------------------------------------------------------------------

    Outlays (gross), detail:
86.90 Outlays from new current authority       1,104       1,342       1,366
86.93 Outlays from current balances.....                                  43
86.97 Outlays from new permanent 
        authority.......................         183         184         180
86.98 Outlays from permanent balances...         109
                                           ---------   ---------  ----------
87.00   Total outlays (gross)...........       1,396       1,526       1,589
----------------------------------------------------------------------------

    Offsets:
      Against gross budget authority and outlays:

        Offsetting collections (cash) 
            from:
88.00     Federal sources...............        -183        -184        -180
88.40     Non-Federal sources...........
                                           ---------   ---------  ----------
88.90       Total, offsetting 
              collections (cash)........        -183        -184        -180
----------------------------------------------------------------------------

    Net budget authority and outlays:
89.00 Budget authority..................       1,155       1,377       1,366
90.00 Outlays...........................       1,212       1,342       1,409
---------------------------------------------------------------------------

    This appropriation finances educational assistance allowances for 
certain peacetime veterans and for eligible dependents of those 
veterans: (a) who died from service-connected causes or have a total and 
permanent rated service-connected disability; and (b) servicepersons who 
were captured or missing in action. In addition, certain disabled 
veterans are provided with vocational rehabilitation, specially adapted 
housing grants, and automobile grants with the associated approved 
adaptive equipment. The funding level in 1998 will consist of 
appropriated funds of $1,366 million and available funds from 1997 of 
$46 million.

    The following table provides a comparison of trainees and costs for 
the Dependents Educational Assistance program.

                       NUMBER OF TRAINEES AND COST

                                     1996 actual  1997 est.   1998 est.
Sons and daughters:
  Number of trainees................      35,685      36,609      37,558
  Average cost per trainee..........      $2,559      $2,560      $2,560
                                    ------------------------------------
      Total cost (in millions)......         $91         $94         $96
                                    ====================================
Spouses and widow(ers):
  Number of trainees................       4,969       5,273       5,597
  Average cost per trainee..........      $2,067      $2,068      $2,069
                                    ------------------------------------
      Total cost (in millions)......         $10         $11         $12
                                    ====================================

    Special assistance to disabled veterans.--Service-disabled veterans 
requiring vocational rehabilitation receive assistance to cover the 
costs of subsistence, tuition, books, supplies, and equipment.

    Specially adapted housing grants, up to a maximum of $38,000, are 
provided to certain severely disabled veterans. Veterans who suffer 
service-connected blindness or who have lost the use of both upper 
extremities can receive up to $6,500.

    An allowance, up to a maximum of $5,500, is provided to certain 
service-disabled veterans and servicepersons toward the purchase price 
of an automobile. Adaptive equipment and the maintenance and replacement 
of such equipment is also provided.

    The following table shows a caseload and cost comparison for these 
beneficiaries.

                     CASELOAD AND AVERAGE COST DATA

                                     1996 actual  1997 est.   1998 est.
Vocational Rehabilitation:
  Number of trainees:
    10% rated disabled..............       3,987       3,919       3,635
    rehabilitated...................         787         905       1,081
    20% rated disabled..............      15,056      14,800      13,728
    rehabilitated...................       2,182       2,508       2,995
    30% rated disabled..............      12,055      11,849      10,992
    rehabilitated...................       1,784       2,051       2,449
    40% rated disabled..............       7,270       7,146       6,630
    rehabilitated...................       1,102       1,267       1,513
    50% rated disabled..............       3,845       3,779       3,506
    rehabilitated...................         586         674         804
    60% rated disabled..............       2,746       2,699       2,504
    rehabilitated...................         404         465         555
    70% rated disabled..............       1,051       1,033         958
    rehabilitated...................         173         199         238
    80% rated disabled..............         485         477         442
    rehabilitated...................          97         111         133
    90% rated disabled..............         154         151         140

[[Page 904]]

    rehabilitated...................          38          42          50
    100% rated disabled.............       5,072       4,986       4,625
    rehabilitated...................         242         278         332
      Total number of trainees......      51,721      50,839      47,160
      Total number rehabilitated....       7,395       8,500      10,150
      Percent of total rehabilitated       14.30       16.72       21.52
  Average cost per trainee..........      $6,856      $7,045      $7,238
                                    ------------------------------------
      Total cost (in millions)......        $355        $358        $341
                                    ====================================
Housing grants:
  Number of housing grants..........         429         429         429
  Average cost per grant............     $33,535     $33,535     $33,535
                                    ------------------------------------
      Total cost (in millions)......         $14         $14         $14
                                    ====================================
Automobiles or other conveyances:
  Number of conveyances.............         843         843         843
  Average cost per conveyance.......      $5,496      $5,496      $5,496
                                    ------------------------------------
      Total cost (in millions)......          $5          $5          $5
                                    ====================================
Adaptive equipment (including 
    maintenance, repair and 
    installation for automobiles):
  Number of items...................       6,734       6,593       6,455
  Average cost......................      $3,318      $3,411      $3,500
                                    ------------------------------------
      Total cost (in millions)......         $22         $22         $23
                                    ====================================

    Work-Study.--Certain veterans pursuing a program of rehabilitation, 
education, or training, who are enrolled as a full-time student, can 
work up to 250 hours and receive a maximum of $1,187.50 per semester, 
paid at the rate of the Federal ($5.15 on 9/1/97) or State minimum wage, 
whichever is higher.

                                     1996 actual  1997 est.   1998 est.
  Number of contracts...............      30,887      27,864      28,687

    Payments to States.--State approving agencies are reimbursed for the 
costs of inspecting, approving, and supervising programs of education 
and training offered by educational institutions and training 
establishments in which veterans, dependents, and reservists are 
enrolled or are about to enter.

    All Volunteer Force educational assistance (Montgomery GI Bill).--
Public Law 98-525, enacted October 19, 1984, established two new 
peacetime educational programs: an assistance program for veterans who 
enter active duty during the period beginning July 1, 1985; and an 
assistance program for certain members of the Selected Reserve. The 
Readjustment benefits appropriation pays the basic benefit allowance for 
the peacetime veterans. Supplementary educational assistance for 
peacetime veterans and the basic benefit allowance for reservists are 
financed by payments from the Department of Defense and the Department 
of Transportation.

    The following table shows a caseload and cost comparison for these 
beneficiaries under existing legislation.

                     CASELOAD AND AVERAGE COST DATA

                                     1996 actual  1997 est.   1998 est.
Veterans:
  Number of trainees................     296,353     323,400     345,300
  Average cost per trainee..........      $2,623      $2,755      $2,784
                                    ------------------------------------
      Total cost (in millions)......     \1\$777    \2\ $891    \3\ $961
                                    ====================================
Reservists:
  Number of trainees................      86,196      82,400      80,300
  Average cost per trainee..........      $1,101      $1,187      $1,235
                                    ------------------------------------
      Total cost (in millions)......         $95         $98         $99
                                    ====================================
    \1\ Includes $689 million of basic benefits (VA funded), $14 million 
of basic benefits (DOD funded), and $74 million of supplemental benefits 
(DOD funded).
    \2\ Includes $805 million of basic benefits (VA funded), $14 million 
of basic benefits, (DOD funded) and $72 million of supplemental benefits 
(DOD funded).
    \3\ Includes $880 million of basic benefits (VA funded), $11 million 
of basic benefits (DOD funded) and $70 million of supplemental benefits 
(DOD funded).

               Object Classification (in millions of dollars)

----------------------------------------------------------------------------
Identification code 36-0137-0-1-702      1996 actual   1997 est.   1998 est.
----------------------------------------------------------------------------
41.0  Direct obligations: Grants, 
        subsidies, and contributions....       1,225       1,348       1,412
99.0  Reimbursable obligations: 
        Subtotal, reimbursable 
        obligations.....................         183         184         180
                                           ---------   ---------  ----------
99.9    Total obligations...............       1,408       1,532       1,592
---------------------------------------------------------------------------

                                <F-dash>

  Reinstated Entitlement Program for Survivors Under Public Law 97-377

               Program and Financing (in millions of dollars)

----------------------------------------------------------------------------
Identification code 36-0200-0-1-701      1996 actual   1997 est.   1998 est.
----------------------------------------------------------------------------

    Obligations by program activity:
      Direct program:

00.01   Benefit payments................          21          19          18
00.02   Administrative expenses, VA.....           1           1           1
00.03   Cole v. Brown payments..........           1
                                           ---------   ---------  ----------
00.91     Total direct program..........          23          20          19
                                           ---------   ---------  ----------
10.00   Total obligations...............          23          20          19
----------------------------------------------------------------------------

    Budgetary resources available for obligation:
22.00 New budget authority (gross)......          22          20          19
23.95 New obligations...................         -23         -20         -19
----------------------------------------------------------------------------

    New budget authority (gross), detail:
68.00 Spending authority from offsetting 
        collections (gross): Offsetting 
        collections (cash)..............          22          20          19
----------------------------------------------------------------------------

    Change in unpaid obligations:
72.40 Unpaid obligations, start of year: 
        Obligated balance: Appropriation          11          12          12
73.10 New obligations...................          23          20          19
73.20 Total outlays (gross).............         -20         -20         -19
74.40 Unpaid obligations, end of year: 
        Obligated balance: Appropriation          12          12          12
----------------------------------------------------------------------------

    Outlays (gross), detail:
86.97 Outlays from new permanent 
        authority.......................          10           8           7
86.98 Outlays from permanent balances...          10          12          12
                                           ---------   ---------  ----------
87.00   Total outlays (gross)...........          20          20          19
----------------------------------------------------------------------------

    Offsets:
      Against gross budget authority and outlays:

88.00   Offsetting collections (cash) 
          from: Federal sources.........         -22         -20         -19
----------------------------------------------------------------------------

    Net budget authority and outlays:
89.00 Budget authority..................
90.00 Outlays...........................          -2
---------------------------------------------------------------------------

    In accordance with Public Law 97-377, this program restores social 
security benefits to certain surviving spouses or children of veterans 
who died of service-connected causes. Financing is provided in the form 
of offsetting collections from the Department of Defense.

                     CASELOAD AND AVERAGE COST DATA

                                     1996 actual  1997 est.   1998 est.
Spouses.............................         432         380         340
Average benefit.....................     $10,334     $10,759     $11,190
Obligations (in millions)...........      $4,464      $4,089      $3,805
Children............................       1,729       1,580       1,440
Average benefit.....................      $9,299      $9,543      $9,966
Obligations (in millions)...........     $16,078     $15,078     $14,350

               Object Classification (in millions of dollars)

----------------------------------------------------------------------------
Identification code 36-0200-0-1-701      1996 actual   1997 est.   1998 est.
----------------------------------------------------------------------------
99.0  Reimbursable obligations: 
        Subtotal, reimbursable 
        obligations.....................          23          20          19
                                           ---------   ---------  ----------

[[Page 905]]


99.9    Total obligations...............          23          20          19
---------------------------------------------------------------------------

                                <F-dash>

                   Veterans Insurance and Indemnities

    For military and naval insurance, national service life insurance, 
servicemen's indemnities, service-disabled veterans insurance, and 
veterans mortgage life insurance as authorized by 38 U.S.C. chapter 19; 
70 Stat. 887; 72 Stat. 487, [$38,970,000] $51,360,000, to remain 
available until expended. (Departments of Veterans Affairs and Housing 
and Urban Development, and Independent Agencies Appropriations Act, 
1997.)

               Program and Financing (in millions of dollars)

----------------------------------------------------------------------------
Identification code 36-0120-0-1-701      1996 actual   1997 est.   1998 est.
----------------------------------------------------------------------------

    Obligations by program activity:
00.04 Payment to National service life 
        insurance fund..................           2           2           2
00.05 Payment to Service-disabled 
        veterans insurance fund.........          34          31          43
00.06 Total operating expenses..........           9           9           9
                                           ---------   ---------  ----------
10.00   Total obligations...............          45          42          54
----------------------------------------------------------------------------

    Budgetary resources available for obligation:
22.00 New budget authority (gross)......          45          41          54
23.95 New obligations...................         -45         -42         -54
----------------------------------------------------------------------------

    New budget authority (gross), detail:
      Current:

40.00   Appropriation...................          25          39          51
42.00   Transferred from other accounts.          18
                                           ---------   ---------  ----------
43.00     Appropriation (total).........          43          39          51
      Permanent:

68.00   Spending authority from 
          offsetting collections: 
          Offsetting collections (cash).           2           2           2
                                           ---------   ---------  ----------
70.00   Total new budget authority 
          (gross).......................          45          41          53
----------------------------------------------------------------------------

    Change in unpaid obligations:
73.10 New obligations...................          45          42          54
73.20 Total outlays (gross).............         -45         -41         -53
----------------------------------------------------------------------------

    Outlays (gross), detail:
86.90 Outlays from new current authority          43          39          51
86.97 Outlays from new permanent 
        authority.......................           2           2           2
                                           ---------   ---------  ----------
87.00   Total outlays (gross)...........          45          41          53
----------------------------------------------------------------------------

    Offsets:
      Against gross budget authority and outlays:

88.40   Offsetting collections (cash) 
          from: VMLI premiums...........          -2          -2          -2
----------------------------------------------------------------------------

    Net budget authority and outlays:
89.00 Budget authority..................          43          39          53
90.00 Outlays...........................          43          39          53
---------------------------------------------------------------------------
    Note.--The Department of Veterans Affairs insurance policy loans are 
not an extension of Federal credit. Credit schedules previously shown 
for this account have been discontinued.

    Military and naval insurance.--Payments are made to the U.S. 
Government life insurance fund for certain World War I veterans for 
extra hazards of military service and for claims on war risk insurance 
issued to servicemen and veterans of World War I.

    National service life insurance.--Payments are made to the national 
service life insurance fund for certain World War II veterans for: (a) 
the extra hazards of service; (b) gratuitous insurance granted to 
certain persons unable to apply for national service life insurance; and 
(c) death claims on policies under the waiver of a premium while the 
insured was on active duty.

    Payments are also made to policyholders and beneficiaries on 
nonparticipating national service life insurance policies issued to 
World War II veterans with service-connected disabilities.

    Veterans mortgage life insurance (VMLI).--Payments are made to 
mortgage holders under this program which provides mortgage protection 
life insurance to veterans who have received a grant for specially 
adapted housing due to severe disabilities.

    The general decline in the number of policies and the amount of 
insurance in force is expected to continue in 1998 as indicated in the 
following table (dollars in thousands).

                                     1996 actual  1997 est.   1998 est.
National service life insurance 
    policies:
  Number of policies................       1,514       1,383       1,260
  Amount of insurance...............      $7,692      $7,000      $6,350
VMLI policies:
  Number of policies................       3,890       3,740       3,590
  Amount of insurance...............    $229,115    $228,400    $230,000

    Payment to service-disabled veterans insurance fund.--Payments are 
made to the service-disabled veterans insurance fund to supplement the 
premiums and other receipts of the fund in amounts necessary to pay 
claims on insurance policies issued to veterans with service-connected 
disabilities.

               Object Classification (in millions of dollars)

----------------------------------------------------------------------------
Identification code 36-0120-0-1-701      1996 actual   1997 est.   1998 est.
----------------------------------------------------------------------------
41.0  Grants, subsidies, and 
        contributions...................          36          33          45
42.0  Insurance claims and indemnities..           9           9           9
                                           ---------   ---------  ----------
99.9    Total obligations...............          45          42          54
---------------------------------------------------------------------------

                                <F-dash>

Public enterprise funds:

                Service-Disabled Veterans Insurance Fund

               Program and Financing (in millions of dollars)

----------------------------------------------------------------------------
Identification code 36-4012-0-3-701      1996 actual   1997 est.   1998 est.
----------------------------------------------------------------------------

    Obligations by program activity:
      Operating expenses:

00.01   Death claims....................          39          43          48
00.02   All other.......................          13          13          13
                                           ---------   ---------  ----------
00.91     Total operating expenses......          52          56          61
01.01 Capital investment................          14          14          14
                                           ---------   ---------  ----------
10.00   Total obligations...............          66          70          75
----------------------------------------------------------------------------

    Budgetary resources available for obligation:
21.90 Unobligated balance available, 
        start of year: Fund balance.....           3           6           3
22.00 New budget authority (gross)......          69          66          77
                                           ---------   ---------  ----------
23.90   Total budgetary resources 
          available for obligation......          72          72          80
23.95 New obligations...................         -66         -70         -75
24.90 Unobligated balance available, end 
        of year: Fund balance...........           6           3           3
----------------------------------------------------------------------------

    New budget authority (gross), detail:
68.00 Spending authority from offsetting 
        collections (gross): Offsetting 
        collections (cash)..............          69          66          77
----------------------------------------------------------------------------

    Change in unpaid obligations:
72.90 Unpaid obligations, start of year: 
        Obligated balance: Fund balance.           5           5           4
73.10 New obligations...................          66          70          75
73.20 Total outlays (gross).............         -66         -71         -74
74.90 Unpaid obligations, end of year: 
        Obligated balance: Fund balance.           5           4           4
----------------------------------------------------------------------------

    Outlays (gross), detail:
86.97 Outlays from new permanent 
        authority.......................          61          66          70
86.98 Outlays from permanent balances...           5           5           4
                                           ---------   ---------  ----------
87.00   Total outlays (gross)...........          66          71          74
----------------------------------------------------------------------------

    Offsets:
      Against gross budget authority and outlays:

        Offsetting collections (cash) 
            from:
88.00     Federal sources: Payments from 
            VI and I....................         -34         -31         -43
          Non-Federal sources:
88.40       Interest on loans...........          -3          -2          -2
88.40       Insurance premiums earned...         -23         -23         -22
88.40       Optional settlements........          -1          -1          -1
88.40       Repayments of loans.........          -8          -9          -9
                                           ---------   ---------  ----------

[[Page 906]]


88.90       Total, offsetting 
              collections (cash)........         -69         -66         -77
----------------------------------------------------------------------------

    Net budget authority and outlays:
89.00 Budget authority..................
90.00 Outlays...........................          -3           5          -3
---------------------------------------------------------------------------

    This fund finances the payment of claims on nonparticipating life 
insurance policies issued and currently is open for new issues to 
veterans having service-connected disabilities. The program provides 
insurance coverage for service-disabled veterans at standard rates. 
Administrative expenses are paid from the General operating expenses 
appropriation.

    Operating costs--
        Death claims.--Represents payments to designated beneficiaries.
        All other.--Represents payments to policyholders who surrender 
    their policies for their cash value and hold endowment policies 
    which have matured.

    Capital investment.--A policyholder may borrow up to 94 percent of 
the value of his policy.

    The trend in the number and amount of policies in force is indicated 
in the following table (dollars in thousands):

                                     1996 actual  1997 est.   1998 est.
Number of policies..................     163,053     158,833     156,723
Insurance in force..................  $1,492,311  $1,464,200  $1,436,300

    Financing.--Operations are financed from premiums and other 
receipts. Additional funds are received by transfer from the veterans' 
insurance and indemnities appropriation, instead of direct 
appropriations to this fund.

    Operating results and financial condition.--Since premium and other 
receipts are insufficient to cover operations, the fund continues to 
project liabilities in excess of assets. The deficit is expected to 
reach an estimated $451 million by September 30, 1998.

                        Statement of Operations (in millions of dollars)

-----------------------------------------------------------------------------------------------
Identification code   36-4012-0-3-701    1995 actual    1996 actual     1997 est.      1998 est.
-----------------------------------------------------------------------------------------------
0101  Revenue...........................          64             72            68             79
0102  Expense...........................         -66            -67           -69            -71
                                        ------------ --------------  ------------  -------------
0109  Net income or loss (-)............          -2              5            -1              8
-----------------------------------------------------------------------------------------------

                             Balance Sheet (in millions of dollars)

-----------------------------------------------------------------------------------------------
Identification code   36-4012-0-3-701    1995 actual    1996 actual     1997 est.      1998 est.
-----------------------------------------------------------------------------------------------
    ASSETS:
1101  Federal assets: Fund balances with 
        Treasury........................           8             11             7              9
1206  Non-Federal assets: Receivables, 
        net.............................           1              1             3              2
1601  Net value of assets related to 
        pre-1992 direct loans receivable 
        and acquired defaulted 
        guaranteed loans receivable: 
        Direct loans, gross.............          49             55            59             65
                                        ------------ --------------  ------------  -------------
1999    Total assets....................          58             67            69             76
    LIABILITIES:
      Non-Federal liabilities:

2201    Accounts payable................           4              4             5              5
2206    Pension and other actuarial 
          liabilities...................         516            520           522            522
2207    Other...........................           1              1             1              1
                                        ------------ --------------  ------------  -------------
2999    Total liabilities...............         521            525           528            528
    NET POSITION:
3100  Appropriated capital..............           3              6             3              5
3200  Invested capital..................        -466           -463          -462           -456
                                        ------------ --------------  ------------  -------------
3999    Total net position..............        -463           -457          -459           -451
                                        ------------ --------------  ------------  -------------
4999  Total liabilities and net position          58             68            69             77
-----------------------------------------------------------------------------------------------

               Object Classification (in millions of dollars)

----------------------------------------------------------------------------
Identification code 36-4012-0-3-701      1996 actual   1997 est.   1998 est.
----------------------------------------------------------------------------
33.0  Investments and loans.............          14          14          14
42.0  Insurance claims and indemnities..          52          56          61
                                           ---------   ---------  ----------
99.9    Total obligations...............          66          70          75
---------------------------------------------------------------------------

                                <F-dash>

                    Veterans Reopened Insurance Fund

               Program and Financing (in millions of dollars)

----------------------------------------------------------------------------
Identification code 36-4010-0-3-701      1996 actual   1997 est.   1998 est.
----------------------------------------------------------------------------

    Obligations by program activity:
      Operating expenses:

00.01   Death claims....................          31          36          39
00.02   Dividends.......................          30          31          27
00.03   All other.......................           9           9           8
                                           ---------   ---------  ----------
00.91     Total operating expenses......          71          76          74
01.01 Capital investment: Policy loans..           7           7           7
                                           ---------   ---------  ----------
10.00   Total obligations...............          78          83          81
----------------------------------------------------------------------------

    Budgetary resources available for obligation:
      Unobligated balance available, start of year:

21.90   Fund balance....................                       1           1
21.91   U.S. Securities: Par value......         498         492         480
                                           ---------   ---------  ----------
21.99     Total unobligated balance, 
            start of year...............         498         493         481
22.00 New budget authority (gross)......          72          71          66
                                           ---------   ---------  ----------
23.90   Total budgetary resources 
          available for obligation......         570         564         547
23.95 New obligations...................         -78         -83         -81
      Unobligated balance available, end of year:

24.90   Fund balance....................           1           1           1
24.91   U.S. Securities: Par value......         492         480         465
                                           ---------   ---------  ----------
24.99   Total unobligated balance, end 
          of year.......................         493         481         466
----------------------------------------------------------------------------

    New budget authority (gross), detail:
68.00 Spending authority from offsetting 
        collections (gross): Offsetting 
        collections (cash)..............          72          71          66
----------------------------------------------------------------------------

    Change in unpaid obligations:
72.91 Unpaid obligations, start of year: 
        Obligated balance: U.S. 
        Securities: Par value...........          28          33          36
73.10 New obligations...................          78          83          81
73.20 Total outlays (gross).............         -73         -79         -78
74.91 Unpaid obligations, end of year: 
        Obligated balance: U.S. 
        Securities: Par value...........          33          36          39
----------------------------------------------------------------------------

    Outlays (gross), detail:
86.97 Outlays from new permanent 
        authority.......................          69          71          66
86.98 Outlays from permanent balances...           4           8          12
                                           ---------   ---------  ----------
87.00   Total outlays (gross)...........          73          79          78
----------------------------------------------------------------------------

    Offsets:
      Against gross budget authority and outlays:

        Offsetting collections (cash) 
            from:
88.00     Federal sources: Interest on 
            U.S. securities.............         -48         -46         -43
          Non-Federal sources:
88.40       Interest on loans...........          -1          -2          -2
88.40       Insurance premiums earned...         -17         -17         -15
88.40       Repayments of loans.........          -6          -6          -6
                                           ---------   ---------  ----------
88.90       Total, offsetting 
              collections (cash)........         -72         -71         -66
----------------------------------------------------------------------------

    Net budget authority and outlays:
89.00 Budget authority..................
90.00 Outlays...........................           1           9          12
---------------------------------------------------------------------------
    Note.--The Department of Veterans Affairs insurance policy loans are 
not an extension of Federal credit. Credit schedules previously shown 
for this account have been discontinued.

    This fund pays claims and administrative costs on participating life 
insurance policies issued during the period May 1, 1965, through May 2, 
1966, under three life insurance programs: (1) service-disabled standard 
insurance; (2) service-disabled rated insurance; and (3) nonservice 
disabled insur-

[[Page 907]]

ance availing disabled World War II and Korean conflict veterans an 
opportunity to acquire life insurance coverage who were no longer 
eligible for other Government insurance.

    Budget program--
        Death claims.--Represents payments to designated beneficiaries.
        Dividends.--Policyholders participate in the distribution of 
    annual dividends.
        All other.--This represents payments to the General operating 
    expenses appropriation for the administrative costs of processing 
    claims and maintaining the accounts, and to those policyholders who: 
    (a) surrender their policies for cash value; (b) hold endowment 
    policies which have matured; and (c) have purchased total disability 
    income coverage and subsequently become disabled.
        Policy loans made.--A policyholder may borrow up to 94 percent 
    of the cash value of his policy at an interest rate adjusted to 
    reflect private sector borrowing costs.
        The following table reflects the decrease in the number of 
    policies and the amount of insurance in force (dollars in 
    thousands):

                                     1996 actual  1997 est.   1998 est.
  Number of policies................      97,502      92,782      87,852
  Insurance in force................    $750,079    $730,000    $706,800

    Financing.--Operations are financed from premiums collected from 
policyholders and interest on investments. Excess earnings of the fund 
are now distributed to the policyholders in the form of an annual 
dividend.

                        Statement of Operations (in millions of dollars)

-----------------------------------------------------------------------------------------------
Identification code   36-4010-0-3-701    1995 actual    1996 actual     1997 est.      1998 est.
-----------------------------------------------------------------------------------------------
0101  Revenue...........................          69             68            65             61
0102  Expense...........................         -78            -62           -66            -62
                                        ------------ --------------  ------------  -------------
0109  Net income or loss (-)............          -9              6            -1             -1
-----------------------------------------------------------------------------------------------

                             Balance Sheet (in millions of dollars)

-----------------------------------------------------------------------------------------------
Identification code   36-4010-0-3-701    1995 actual    1996 actual     1997 est.      1998 est.
-----------------------------------------------------------------------------------------------
    ASSETS:
      Federal assets:

        Investments in US securities:
1102      Treasury securities, par......         526            525           516            504
1106      Receivables, net..............          12             12            11             10
1206  Non-Federal assets: Receivables, 
        net.............................                                        1              1
1601  Net value of assets related to 
        pre-1992 direct loans receivable 
        and acquired defaulted 
        guaranteed loans receivable: 
        Direct loans, gross.............          26             28            29             30
                                        ------------ --------------  ------------  -------------
1999    Total assets....................         565            565           557            545
    LIABILITIES:
      Non-Federal liabilities:

2201    Accounts payable................          38             41            45             48
2206    Pension and other actuarial 
          liabilities...................         516            508           496            482
2207    Other...........................           2              2             2              2
                                        ------------ --------------  ------------  -------------
2999    Total liabilities...............         557            551           543            532
    NET POSITION:
3100  Appropriated capital..............         498            492           481            465
3200  Invested capital..................        -489           -478          -467           -452
                                        ------------ --------------  ------------  -------------
3999    Total net position..............           9             14            14             13
                                        ------------ --------------  ------------  -------------
4999  Total liabilities and net position         566            565           557            545
-----------------------------------------------------------------------------------------------

               Object Classification (in millions of dollars)

----------------------------------------------------------------------------
Identification code 36-4010-0-3-701      1996 actual   1997 est.   1998 est.
----------------------------------------------------------------------------
33.0  Investments and loans.............           7           7           7
42.0  Insurance claims and indemnities..          37          42          44
43.0  Interest and dividends............          34          34          30
                                           ---------   ---------  ----------
99.9    Total obligations...............          78          83          81
---------------------------------------------------------------------------

                                <F-dash>

                Servicemembers' Group Life Insurance Fund

               Program and Financing (in millions of dollars)

----------------------------------------------------------------------------
Identification code 36-4009-0-3-701      1996 actual   1997 est.   1998 est.
----------------------------------------------------------------------------

    Obligations by program activity:
00.01 Premium payments..................         474         509         492
00.03 Payment to GOE account............                       1           1
                                           ---------   ---------  ----------
10.00   Total obligations (object class 
          41.0).........................         474         510         493
----------------------------------------------------------------------------

    Budgetary resources available for obligation:
21.91 Unobligated balance available, 
        start of year: U.S. Securities: 
        Par value.......................          15           7           1
22.00 New budget authority (gross)......         467         504         492
                                           ---------   ---------  ----------
23.90   Total budgetary resources 
          available for obligation......         482         511         493
23.95 New obligations...................        -474        -510        -493
24.91 Unobligated balance available, end 
        of year: U.S. Securities: Par 
        value...........................           7           1           1
----------------------------------------------------------------------------

    New budget authority (gross), detail:
68.00 Spending authority from offsetting 
        collections (gross): Offsetting 
        collections (cash)..............         467         504         492
----------------------------------------------------------------------------

    Change in unpaid obligations:
72.40 Unpaid obligations, start of year: 
        Obligated balance: offsetting 
        collections.....................           4           3           3
73.10 New obligations...................         474         510         493
73.20 Total outlays (gross).............        -476        -510        -492
74.40 Unpaid obligations, end of year: 
        Obligated balance: offsetting 
        collections.....................           3           3           3
----------------------------------------------------------------------------

    Outlays (gross), detail:
86.97 Outlays from new permanent 
        authority.......................         461         503         491
86.98 Outlays from permanent balances...          15           7           1
                                           ---------   ---------  ----------
87.00   Total outlays (gross)...........         476         510         492
----------------------------------------------------------------------------

    Offsets:
      Against gross budget authority and outlays:

88.40   Offsetting collections (cash) 
          from: Non-Federal sources: 
          Withholdings from serviceman's 
          pay...........................        -467        -504        -492
----------------------------------------------------------------------------

    Net budget authority and outlays:
89.00 Budget authority..................
90.00 Outlays...........................           8           6
---------------------------------------------------------------------------

    Budget program.--This fund finances the payment of group life 
insurance premiums to private insurance companies under the 
Servicemembers' Group Life Insurance Act of 1965, as amended. 

                        Statement of Operations (in millions of dollars)

-----------------------------------------------------------------------------------------------
Identification code   36-4009-0-3-701    1995 actual    1996 actual     1997 est.      1998 est.
-----------------------------------------------------------------------------------------------
0101  Revenue...........................         461            467           504            493
0102  Expense...........................        -489           -475          -510           -493
                                        ------------ --------------  ------------  -------------
0109  Net income or loss (-)............         -28             -8            -6
-----------------------------------------------------------------------------------------------

                                <F-dash>

Credit accounts:

          Veterans Housing Benefit Program Fund Program Account

                [Guaranty and Indemnity Program Account]

                      (including transfer of funds)

    For the cost of direct and guaranteed loans, such sums as may be 
necessary to carry out the program, as authorized by 38 U.S.C. chapter 
37, as amended: Provided, That such costs, including the cost of 
modifying such loans, shall be as defined in section 502 of the 
Congressional Budget Act of 1974, as amended: Provided further, That 
during fiscal year 1998, within the resources available, not to exceed 
$300,000 in gross obligations for direct loans are authorized for 
specially adapted housing loans.
    In addition, for administrative expenses to carry out the direct and 
guaranteed loan programs, [$105,226,000] $160,437,000, which may be 
transferred to and merged with the appropriation for ``General

[[Page 908]]

operating expenses''. (Departments of Veterans Affairs and Housing and 
Urban Development, and Independent Agencies Appropriations Act, 1997.)

              Unavailable Collections (in millions of dollars)

----------------------------------------------------------------------------
Identification code 36-0138-0-1-704      1996 actual   1997 est.   1998 est.
----------------------------------------------------------------------------
    Balance, start of year:
01.99 Balance, start of year............         263         169         918
    Receipts:
02.01 Guaranteed loan downward subsidy 
        reestimate......................                     789
02.02 Direct loan downward subsidy 
        reestimate......................                     157
                                           ---------   ---------  ----------
02.99   Total receipts..................                     946
                                           ---------   ---------  ----------
03.00 Offsetting Collections............         169
04.00 Total: Balances and collections...         432       1,115         918
    Appropriation:
05.01 Veterans housing benefit fund.....        -263        -197        -192
                                           ---------   ---------  ----------
05.99 Subtotal appropriation............        -263        -197        -192
07.99 Total balance, end of year........         169         918         726
---------------------------------------------------------------------------

               Program and Financing (in millions of dollars)

----------------------------------------------------------------------------
Identification code 36-0138-0-1-704      1996 actual   1997 est.   1998 est.
----------------------------------------------------------------------------

    Obligations by program activity:
00.01 Direct loan subsidy...............          30          49          50
00.02 Guaranteed loan subsidy...........         447         148         142
00.05 Reestimates of direct loan subsidy          63          73
00.06 Interest on reestimates of the 
        direct loan subsidy.............          13          12
00.07 Reestimates of the guaranteed loan 
        subsidy.........................         238          74
00.08 Interest on reestimates of the 
        guaranteed loan subsidy.........          11           9
00.09 Administrative expenses...........         118         139         160
                                           ---------   ---------  ----------
10.00   Total obligations...............         920         504         352
----------------------------------------------------------------------------

    Budgetary resources available for obligation:
22.00 New budget authority (gross)......         920         504         352
23.95 New obligations...................        -920        -504        -352
----------------------------------------------------------------------------

    New budget authority (gross), detail:
      Current:

40.00   Appropriation...................         118         139         160
40.25   Appropriation (special fund, 
          indefinite)...................                     197         192
                                           ---------   ---------  ----------
43.00     Appropriation (total).........         118         336         352
      Permanent:

60.05   Appropriation (indefinite)......                     168
        Spending authority from 
            offsetting collections:
68.00     Offsetting collections (cash) 
            Total downward reestimate...         708
68.26     Offsetting collections 
            (unavailable balances)......         263
68.45     Portion not available for 
            obligation (limitation on 
            obligations)................        -169
                                           ---------   ---------  ----------
68.90       Spending authority from 
              offsetting collections 
              (total)...................         802
                                           ---------   ---------  ----------
70.00   Total new budget authority 
          (gross).......................         920         504         352
----------------------------------------------------------------------------

    Change in unpaid obligations:
73.10 New obligations...................         920         504         352
73.20 Total outlays (gross).............        -920        -504        -352
----------------------------------------------------------------------------

    Outlays (gross), detail:
86.90 Outlays from new current authority         118         336         352
86.97 Outlays from new permanent 
        authority.......................         802         168
                                           ---------   ---------  ----------
87.00   Total outlays (gross)...........         920         504         352
----------------------------------------------------------------------------

    Offsets:
      Against gross budget authority and outlays:

88.00   Offsetting collections (cash) 
          from: Federal sources.........        -708
----------------------------------------------------------------------------

    Net budget authority and outlays:
89.00 Budget authority..................         212         504         352
90.00 Outlays...........................         211         504         352
---------------------------------------------------------------------------

                 Summary of Budget Authority and Outlays

                        (in millions of dollars)

                                     1996 actual  1997 est.   1998 est.
Enacted/requested:
  Budget Authority..................         212         504         352
  Outlays...........................         212         504         352
Legislative proposal, subject to 
    PAYGO:
  Budget Authority..................                                 -29
  Outlays...........................                                 -29
                                    ------------------------------------
Total:
  Budget Authority..................         212         504         323
  Outlays...........................         212         504         323
                                    ====================================

Summary of Loan Levels, Subsidy Budget Authority and Outlays by Program (in 
                            millions of dollars)

----------------------------------------------------------------------------
Identification code 36-0138-0-1-704      1996 actual   1997 est.   1998 est.
----------------------------------------------------------------------------
    Direct loan levels supportable by subsidy 
                budget authority:
1150  Direct loan levels................       1,336       1,887       2,144
                                           ---------   ---------  ----------
1159    Total direct loan levels........       1,336       1,887       2,144
    Direct loan subsidy (in percent):
1320  Subsidy rate......................        1.76        2.61        2.36
                                           ---------   ---------  ----------
1329    Weighted average subsidy rate...        1.76        2.61        2.36
    Direct loan subsidy budget authority:
1330  Subsidy budget authority..........          29          49          50
                                           ---------   ---------  ----------
1339    Total subsidy budget authority..          29          49          50
    Direct loan subsidy outlays:
1340  Subsidy outlays...................         105         134          50
                                           ---------   ---------  ----------
1349    Total subsidy outlays...........         105         134          50
----------------------------------------------------------------------------

    Guaranteed loan levels supportable by subsidy 
                budget authority:
2150  Loan guarantee levels.............      28,676      30,230      28,945
                                           ---------   ---------  ----------
2159    Total loan guarantee levels.....      28,676      30,230      28,945
    Guaranteed loan subsidy (in percent):
2320  Subsidy rate......................        0.42        0.49        0.49
                                           ---------   ---------  ----------
2329    Weighted average subsidy rate...        0.42        0.49        0.49
    Guaranteed loan subsidy budget authority:
2330  Subsidy budget authority..........         697         231         142
                                           ---------   ---------  ----------
2339    Total subsidy budget authority..         697         231         142
    Guaranteed loan subsidy outlays:
2340  Subsidy outlays...................         120         148         142
                                           ---------   ---------  ----------
2349    Total subsidy outlays...........         120         148         142
----------------------------------------------------------------------------

    Administrative expense data:
3510  Budget authority..................         118         139         160
3590  Outlays...........................         118         139         160
---------------------------------------------------------------------------

    The Administration is proposing to consolidate all information on 
Loan Guaranty, Guaranty and Indemnity, and Direct Loan housing programs 
into a single housing fund called the Veterans Housing Benefit Program 
Fund (VHBPF). All current year and prior year data are presented on a 
comparable basis to the budget year in the single account. A legislative 
proposal is being submitted with this budget that supports this budget 
presentation. Beginning October 1, 1997, all appropriations and income 
received from Loan Guaranty, Guaranty and Indemnity, and Direct Loan 
housing accounts would be deposited in this new fund (except the portion 
specifically designated for the Native American Pilot Program). No 
program changes result as an effect of this presentation.

    As required by the Federal Credit Reform Act of 1990, this account 
records, for this program, the subsidy costs associated with the direct 
loans obligated and loan guarantees committed in 1992 and beyond, 
(including modifications of direct loans or loan guarantees that 
resulted from obligations or commitments in any year) as well as for the 
administrative expenses of this program. The subsidy amounts are 
estimated on a net present value basis.

    The following Federal guaranty protects lenders against losses: (a) 
for loans of $45,000, or less, 50 percent of the

[[Page 909]]

loan is guaranteed; (b) for loans greater than $45,000, but not more 
than $56,250, $22,500; (c) for loans more than $56,250 but less than 
$144,000, the lesser of $36,000 or 40 percent of the loan; or (d) for 
loans greater than $144,000, the lesser of $50,750 or 25 percent of the 
loan.

    The Administration is proposing legislation which will make 
permanent three provisions of the Omnibus Budget Reconciliation Act of 
1993 due to expire in 1998: (1) the loan origination fee increase of .75 
percent; (2) the three-percent fee for multiple home loans with less 
than five percent down; and (3) the current law on resale losses on 
loans. 

               Object Classification (in millions of dollars)

----------------------------------------------------------------------------
Identification code 36-0138-0-1-704      1996 actual   1997 est.   1998 est.
----------------------------------------------------------------------------
25.3  Purchases of goods and services 
        from Government accounts........         118         139         160
41.0  Grants, subsidies, and 
        contributions...................         802         365         192
                                           ---------   ---------  ----------
99.9    Total obligations...............         920         504         352
---------------------------------------------------------------------------

                                <F-dash>

          Veterans Housing Benefit Program Fund Program Account

                (Legislative proposal, subject to PAYGO)

               Program and Financing (in millions of dollars)

----------------------------------------------------------------------------
Identification code 36-0138-4-1-704      1996 actual   1997 est.   1998 est.
----------------------------------------------------------------------------

    Obligations by program activity:
00.01 Direct loan subsidy...............                                 -29
                                           ---------   ---------  ----------
10.00   Total obligations (object class 
          41.0).........................                                 -29
----------------------------------------------------------------------------

    Budgetary resources available for obligation:
22.00 New budget authority (gross)......                                 -29
23.95 New obligations...................                                  29
----------------------------------------------------------------------------

    New budget authority (gross), detail:
40.05 Appropriation (indefinite)........                                 -29
----------------------------------------------------------------------------

    Change in unpaid obligations:
73.10 New obligations...................                                 -29
73.20 Total outlays (gross).............                                  29
----------------------------------------------------------------------------

    Outlays (gross), detail:
86.90 Outlays from new current authority                                 -29
----------------------------------------------------------------------------

    Net budget authority and outlays:
89.00 Budget authority..................                                 -29
90.00 Outlays...........................                                 -29
---------------------------------------------------------------------------

Summary of Loan Levels, Subsidy Budget Authority and Outlays by Program (in 
                            millions of dollars)

----------------------------------------------------------------------------
Identification code 36-0138-4-1-704      1996 actual   1997 est.   1998 est.
----------------------------------------------------------------------------
    Direct loan levels supportable by subsidy 
                budget authority:
1159  Total direct loan levels..........
    Direct loan subsidy (in percent):
1320  Subsidy rate......................                               -1.36
                                           ---------   ---------  ----------
1329    Weighted average subsidy rate...                               -1.36
    Direct loan subsidy budget authority:
1330  Subsidy budget authority..........                                 -29
                                           ---------   ---------  ----------
1339    Total subsidy budget authority..                                 -29
    Direct loan subsidy outlays:
1340  Subsidy outlays...................                                 -29
                                           ---------   ---------  ----------
1349    Total subsidy outlays...........                                 -29
---------------------------------------------------------------------------

    Legislation will be proposed to increase the funding fees in the 
vendee loan program to 2.25 percent, matching the FHA fee structure. 
This program offers financing of VA real estate obtained as a result of 
property foreclosures and is available to both veteran and non-veteran 
purchasers.

    Legislation will also be introduced to permanently extend loan asset 
sales enhancement authority. This allows VA to guarantee the 
certificates which securitize VA vendee loan sales. VA can then obtain 
the best pricing for these loans and receive a greater cash yield 
without any additional risk over previous loan sale procedures.

                                <F-dash>

   Veterans Housing Benefit Program Fund Direct Loan Financing Account

               Program and Financing (in millions of dollars)

----------------------------------------------------------------------------
Identification code 36-4256-0-3-704      1996 actual   1997 est.   1998 est.
----------------------------------------------------------------------------

    Obligations by program activity:
00.01 Direct loans......................       1,336       1,887       2,144
00.02 Interest on Treasury borrowing....         238          87         121
00.04 Property sales expense............           1           1           2
00.05 Property improvement expense......                       1           1
00.06 Property management/other expense.           3           2
00.07 Payment of downward reestimate to 
        program account.................         113         120
00.08 Payment of excess interest earned 
        to program account..............          12          37
                                           ---------   ---------  ----------
10.00   Total obligations...............       1,703       2,135       2,268
----------------------------------------------------------------------------

    Budgetary resources available for obligation:
22.00 New financing authority (gross)...       1,703       2,135       2,268
23.95 New obligations...................      -1,703      -2,135      -2,268
----------------------------------------------------------------------------

    New financing authority (gross), detail:
67.15 Authority to borrow (indefinite)..       1,356       1,911       2,093
      Spending authority from offsetting 
          collections:

68.00   Offsetting collections (cash)...       1,512       1,449       1,860
68.47   Portion applied to debt 
          reduction.....................      -1,165      -1,225      -1,685
                                           ---------   ---------  ----------
68.90     Spending authority from 
            offsetting collections 
            (total).....................         347         224         175
                                           ---------   ---------  ----------
70.00   Total new financing authority 
          (gross).......................       1,703       2,135       2,268
----------------------------------------------------------------------------

    Change in unpaid obligations:
72.90 Unpaid obligations, start of year: 
        Obligated balance: Obligated 
        balance.........................           7           5           6
73.10 New obligations...................       1,703       2,135       2,268
73.20 Total financing disbursements 
        (gross).........................      -1,705      -2,134      -2,268
74.90 Unpaid obligations, end of year: 
        Obligated balance: Obligated 
        balance.........................           5           6           6
87.00 Total financing disbursements 
        (gross).........................       1,705       2,134       2,268
----------------------------------------------------------------------------

    Offsets:
      Against gross financing authority and 
          financing disbursements:

        Offsetting collections (cash) 
            from:
88.00     Federal sources: Payments from 
            program account.............        -105        -134         -51
          Non-Federal sources:
88.40       Repayments of principal.....         -17         -28         -37
88.40       Interest received on loans..         -48         -88        -115
88.40       Fees........................         -11         -17         -20
88.40       Interest from Treasury......        -126
88.40       Loan sale proceeds, net.....      -1,196      -1,110      -1,548
88.40       Cash sale of properties.....          -2         -18         -27
88.40       Other revenue...............          -7         -54         -62
                                           ---------   ---------  ----------
88.90       Total, offsetting 
              collections (cash)........      -1,512      -1,449      -1,860
----------------------------------------------------------------------------

    Net financing authority and financing 
        disbursements:
89.00 Financing authority...............         191         686         408
90.00 Financing disbursements...........         193         685         408
---------------------------------------------------------------------------

               Status of Direct Loans (in millions of dollars)

----------------------------------------------------------------------------
Identification code 36-4256-0-3-704      1996 actual   1997 est.   1998 est.
----------------------------------------------------------------------------
    Position with respect to appropriations act 
                limitation on obligations:
1111  Limitation on direct loans........
1131  Direct loan obligations exempt 
        from limitation.................       1,336       1,887       2,144
                                           ---------   ---------  ----------
1150    Total direct loan obligations...       1,336       1,887       2,144
----------------------------------------------------------------------------

    Cumulative balance of direct loans 
                outstanding:
1210  Outstanding, start of year........         722         723       1,398

[[Page 910]]

1231  Disbursements: Direct loan 
        disbursements...................       1,396       1,887       2,144
      Repayments:

1251    Repayments and prepayments......         -62         -27         -37
1253    Proceeds from loan asset sales 
          to the public with recourse...      -1,196      -1,111      -1,549
1262  Adjustments: Discount on loan 
        asset sales to the public or 
        discounted......................         -38         -65         -92
      Write-offs for default:

1263    Direct loans....................          -9          -9         -17
1264    Other adjustments, net..........         -90
                                           ---------   ---------  ----------
1290    Outstanding, end of year........         723       1,398       1,847
---------------------------------------------------------------------------

    As required by the Federal Credit Reform Act of 1990, this non-
budgetary account records all cash flows to and from the Government 
resulting from direct loans obligated in 1992 and beyond (including 
modifications of direct loans that resulted from obligations in any 
year). The amounts in this account are a means of financing and are not 
included in the budget totals.

                             Balance Sheet (in millions of dollars)

-----------------------------------------------------------------------------------------------
Identification code   36-4256-0-3-704    1995 actual    1996 actual     1997 est.      1998 est.
-----------------------------------------------------------------------------------------------
    ASSETS:
1101  Federal assets: Fund balances with 
        Treasury........................       1,018            954
1206  Non-Federal assets: Receivables, 
        net.............................          18             29
      Net value of assets related to 
          post-1991 direct loans 
          receivable:

1401    Direct loans receivable, gross..         540            723         1,398          1,847
1404    Foreclosed property.............           6             58
                                        ------------ --------------  ------------  -------------
1499      Net present value of assets 
            related to direct loans.....         546            781         1,398          1,847
1603  Net value of assets related to 
        pre-1992 direct loans receivable 
        and acquired defaulted 
        guaranteed loans receivable: 
        Allowance for estimated 
        uncollectible loans and interest 
        (-).............................                         15            28             38
                                        ------------ --------------  ------------  -------------
1999    Total assets....................       1,582          1,779         1,426          1,885
    LIABILITIES:
      Federal liabilities:

2102    Interest payable................           7              5
2104    Resources payable to Treasury...       1,575          1,768         1,413          1,868
      Non-Federal liabilities:

2201    Accounts payable................           7              7            13             17
2204    Liabilities for loan guarantees.          -7             -1
                                        ------------ --------------  ------------  -------------
2999    Total liabilities...............       1,582          1,779         1,426          1,885
                                        ------------ --------------  ------------  -------------
4999  Total liabilities and net position       1,582          1,779         1,426          1,885
-----------------------------------------------------------------------------------------------

                                <F-dash>

   Veterans Housing Benefit Program Fund Direct Loan Financing Account

                (Legislative proposal, subject to PAYGO)

               Program and Financing (in millions of dollars)

----------------------------------------------------------------------------
Identification code 36-4256-4-3-704      1996 actual   1997 est.   1998 est.
----------------------------------------------------------------------------

    Obligations by program activity:
00.02 Interest on Treasury borrowing....                                  -1
00.06 Payment to liquidating account for 
        debt collection.................                                 126
                                           ---------   ---------  ----------
10.00   Total obligations...............                                 125
----------------------------------------------------------------------------

    Budgetary resources available for obligation:
22.00 New financing authority (gross)...                                 125
23.95 New obligations...................                                -125
----------------------------------------------------------------------------

    New financing authority (gross), detail:
67.15 Authority to borrow (indefinite)..                                 156
      Spending authority from offsetting 
          collections:

68.00   Offsetting collections (cash)...                                 -42
68.47   Portion applied to debt 
          reduction.....................                                  11
                                           ---------   ---------  ----------
68.90     Spending authority from 
            offsetting collections 
            (total).....................                                 -31
                                           ---------   ---------  ----------
70.00   Total new financing authority 
          (gross).......................                                 125
----------------------------------------------------------------------------

    Change in unpaid obligations:
73.10 New obligations...................                                 125
73.20 Total financing disbursements 
        (gross).........................                                -125
87.00 Total financing disbursements 
        (gross).........................                                 125
----------------------------------------------------------------------------

    Offsets:
      Against gross financing authority and 
          financing disbursements:

        Offsetting collections (cash) 
            from:
          Federal sources:
88.00       Federal sources: Payments 
              from program account......                                 -29
88.00       Repayment from liquidating 
              account for debt 
              collection................                                  43
          Non-Federal sources:
88.40       Fees........................                                  25
88.40       Loan sale proceeds, net.....                                   3
                                           ---------   ---------  ----------
88.90       Total, offsetting 
              collections (cash)........                                  42
----------------------------------------------------------------------------

    Net financing authority and financing 
        disbursements:
89.00 Financing authority...............                                 167
90.00 Financing disbursements...........                                 167
---------------------------------------------------------------------------

    This schedule shows the effects of the Administration's proposal to 
repeal restrictions on collection of loan guaranty debts by Federal 
salary offset or Federal income tax refund offset.

    Legislation will be proposed to increase the funding fees in the 
vendee loan program to 2.25 percent, matching the FHA fee structure. 
This program offers financing of VA real estate obtained as a result of 
property foreclosures and is available to both veteran and non-veteran 
purchasers.

    Legislation will also be proposed to permanently extend loan asset 
sales enhancement authority. This allows VA to guarantee the 
certificates which securitize VA vendee loan sales. VA can then obtain 
the best pricing for these loans and receive a greater cash yield 
without any additional risk over previous loan sale procedures.

                                <F-dash>

 Veterans Housing Benefit Program Fund Guaranteed Loan Financing Account

               Program and Financing (in millions of dollars)

----------------------------------------------------------------------------
Identification code 36-4257-0-3-704      1996 actual   1997 est.   1998 est.
----------------------------------------------------------------------------

    Obligations by program activity:
00.01 Acquisition of homes..............         737       1,412       1,682
00.02 Losses on defaulted loans.........         215         309         385
00.03 Property sales expense............          31          75         102
00.04 Property management expense.......          19          27          36
00.05 Property improvement expense......          16          27          33
00.06 Loans acquired....................          84          86          88
00.07 Payment of downward reestimate to 
        program account.................         462         684
00.08 Payment of excess interest to 
        program account.................         121         105
                                           ---------   ---------  ----------
10.00   Total obligations...............       1,685       2,725       2,326
----------------------------------------------------------------------------

    Budgetary resources available for obligation:
21.90 Unobligated balance available, 
        start of year: Fund balance.....       3,428       3,744       3,170
22.00 New financing authority (gross)...       2,001       2,151       2,400
                                           ---------   ---------  ----------
23.90   Total budgetary resources 
          available for obligation......       5,429       5,895       5,570
23.95 New obligations...................      -1,685      -2,725      -2,326
24.90 Unobligated balance available, end 
        of year: Fund balance...........       3,744       3,170       3,244
----------------------------------------------------------------------------

[[Page 911]]



    New financing authority (gross), detail:
68.00 Spending authority from offsetting 
        collections (gross): Offsetting 
        collections (cash)..............       2,001       2,151       2,400
----------------------------------------------------------------------------

    Change in unpaid obligations:
72.90 Unpaid obligations, start of year: 
        Obligated balance: Obligated 
        balance.........................          18          40          65
73.10 New obligations...................       1,685       2,725       2,326
73.20 Total financing disbursements 
        (gross).........................      -1,663      -2,700      -2,336
74.90 Unpaid obligations, end of year: 
        Obligated balance: Obligated 
        balance.........................          40          65          56
87.00 Total financing disbursements 
        (gross).........................       1,663       2,700       2,336
----------------------------------------------------------------------------

    Offsets:
      Against gross financing authority and 
          financing disbursements:

        Offsetting collections (cash) 
            from:
          Federal sources:
88.00       Payments from program 
              account...................        -697        -231        -142
88.00       Recoveries from direct loans 
              conveyed to the direct 
              loan financing account....        -453        -958      -1,264
88.25     Interest on uninvested funds..        -238        -173        -159
          Non-Federal sources:
88.40       Funding fees................        -516        -572        -550
88.40       Cash sale of properties.....         -74        -205        -271
88.40       Other collections...........         -23         -12         -14
                                           ---------   ---------  ----------
88.90       Total, offsetting 
              collections (cash)........      -2,001      -2,151      -2,400
----------------------------------------------------------------------------

    Net financing authority and financing 
        disbursements:
89.00 Financing authority...............
90.00 Financing disbursements...........        -338         549         -64
---------------------------------------------------------------------------

             Status of Guaranteed Loans (in millions of dollars)

----------------------------------------------------------------------------
Identification code 36-4257-0-3-704      1996 actual   1997 est.   1998 est.
----------------------------------------------------------------------------
    Position with respect to appropriations act 
                limitation on commitments:
2111  Limitation on guaranteed loans 
        made by private lenders.........
2131  Guaranteed loan commitments exempt 
        from limitation.................      28,676      30,230      28,948
                                           ---------   ---------  ----------
2150    Total guaranteed loan 
          commitments...................      28,676      30,230      28,948
----------------------------------------------------------------------------

    Cumulative balance of guaranteed loans 
                outstanding:
2210  Outstanding, start of year........     121,310     130,031     138,044
2231  Disbursements of new guaranteed 
        loans...........................      28,676      30,230      28,948
2232  Guarantees of loans sold to the 
        public with recourse............       1,234         820       1,074
2251  Repayments and prepayments........     -20,239     -21,694     -23,031
      Adjustments:

2261    Terminations for default that 
          result in loans receivable....         -84         309         385
2262    Terminations for default that 
          result in acquisition of 
          property......................        -737      -1,412        -109
2263    Terminations for default that 
          result in claim payments......        -214        -240        -269
2264    Other adjustments, net..........          85
                                           ---------   ---------  ----------
2290    Outstanding, end of year........     130,031     138,044     145,042
----------------------------------------------------------------------------

    Memorandum:
2299  Guaranteed amount of guaranteed 
        loans outstanding, end of year..      42,289      53,415      56,335
----------------------------------------------------------------------------

    Addendum:
      Cumulative balance of defaulted guaranteed 
          loans that result in loans receivable:

2310    Outstanding, start of year......          37          61          82
2331    Disbursements for guaranteed 
          loan claims...................         237         309         385
2351    Repayments of loans receivable..          -5          -8         -11
2361    Write-offs of loans receivable..        -208        -280        -353
                                           ---------   ---------  ----------
2390      Outstanding, end of year......          61          82         103
---------------------------------------------------------------------------

    As required by the Federal Credit Reform Act of 1990, this non-
budgetary account records all cash flows to and from the Government 
resulting from loan guarantees committed in 1992 and beyond (including 
modifications of guaranteed loans that resulted from commitments in any 
year). The amounts in this account are a means of financing and are not 
included in the budget totals.

                             Balance Sheet (in millions of dollars)

-----------------------------------------------------------------------------------------------
Identification code   36-4257-0-3-704    1995 actual    1996 actual     1997 est.      1998 est.
-----------------------------------------------------------------------------------------------
    ASSETS:
1101  Federal assets: Fund balances with 
        Treasury........................       4,004          3,785         3,235          3,300
1206  Non-Federal assets: Receivables, 
        net.............................          38             61            52             53
      Net value of assets related to 
          post-1991 direct loans 
          receivable:

1403    Accounts receivable from 
          foreclosed property...........          14
                                        ------------ --------------  ------------  -------------
1499      Net present value of assets 
            related to direct loans.....          14
      Net value of assets related to 
          post-1991 acquired defaulted 
          guaranteed loans receivable:

1504    Foreclosed property.............         194            415           445            472
                                        ------------ --------------  ------------  -------------
1599      Net present value of assets 
            related to defaulted 
            guaranteed loans............         194            415           445            472
                                        ------------ --------------  ------------  -------------
1999    Total assets....................       4,250          4,261         3,732          3,825
    LIABILITIES:
2101  Federal liabilities: Accounts 
        payable.........................          33
2204  Non-Federal liabilities: 
        Liabilities for loan guarantees.       4,217          4,261         3,732          3,825
                                        ------------ --------------  ------------  -------------
2999    Total liabilities...............       4,250          4,261         3,732          3,825
                                        ------------ --------------  ------------  -------------
4999  Total liabilities and net position       4,250          4,261         3,732          3,825
-----------------------------------------------------------------------------------------------

                                <F-dash>

        Veterans Housing Benefit Program Fund Liquidating Account

               Program and Financing (in millions of dollars)

----------------------------------------------------------------------------
Identification code 36-4258-0-3-704      1996 actual   1997 est.   1998 est.
----------------------------------------------------------------------------

    Obligations by program activity:
      Capital investment:

00.01   Acquisition of homes............         608         675         565
00.02   Property improvements...........          24          26          21
00.04   Cash advances...................          12           9           7
00.05   Acquisition of defaulted 
          guaranteed loans..............          66          64          62
                                           ---------   ---------  ----------
00.91     Total capital investment......         710         774         655
      Operating expenses:

01.01   Property management expense.....          39          39          36
01.02   Sales expense...................          52          54          50
01.03   Claims-Individual homes.........         216         203         170
01.04   Other expenses..................          33          32          31
                                           ---------   ---------  ----------
01.91     Total operating expenses......         340         328         287
                                           ---------   ---------  ----------
02.93   Claims-Individual homes.........       1,050       1,102         942
                                           ---------   ---------  ----------
10.00   Total obligations (object class 
          33.0).........................       1,050       1,102         942
----------------------------------------------------------------------------

    Budgetary resources available for obligation:
21.90 Unobligated balance available, 
        start of year: Fund balance.....         842         192
22.00 New budget authority (gross)......       1,204       1,174       1,078
22.40 Capital transfer to general fund..        -804        -264        -136
                                           ---------   ---------  ----------
23.90   Total budgetary resources 
          available for obligation......       1,242       1,102         942
23.95 New obligations...................      -1,050      -1,102        -942
24.90 Unobligated balance available, end 
        of year: Fund balance...........         192
----------------------------------------------------------------------------

    New budget authority (gross), detail:
68.00 Spending authority from offsetting 
        collections (gross): Offsetting 
        collections (cash)..............       1,204       1,174       1,078
----------------------------------------------------------------------------

    Change in unpaid obligations:
72.90 Unpaid obligations, start of year: 
        Obligated balance: Fund balance.          76          67          71
73.10 New obligations...................       1,050       1,102         942
73.20 Total outlays (gross).............      -1,058      -1,099        -952
74.90 Unpaid obligations, end of year: 
        Obligated balance: Fund balance.          67          71          60
----------------------------------------------------------------------------

    Outlays (gross), detail:
86.97 Outlays from new permanent 
        authority.......................       1,050       1,096         942

[[Page 912]]

86.98 Outlays from permanent balances...           8           3          10
                                           ---------   ---------  ----------
87.00   Total outlays (gross)...........       1,058       1,099         952
----------------------------------------------------------------------------

    Offsets:
      Against gross budget authority and outlays:

        Offsetting collections (cash) 
            from:
88.00     Federal Sources: Payments from 
            Direct Loan Financing 
            Account.....................        -873        -929        -870
          Non-Federal sources:
88.40       Loan and other repayments...         -64         -51         -41
88.40       Loan sale proceeds, net.....         -31
88.40       Sale of homes, cash.........        -121        -104         -97
88.40       Interest on loans...........         -63         -51         -41
88.40       Collection of claims 
              (veteran indebtedness)....         -48         -36         -27
88.40       Other revenue...............          -4          -3          -2
                                           ---------   ---------  ----------
88.90       Total, offsetting 
              collections (cash)........      -1,204      -1,174      -1,078
----------------------------------------------------------------------------

    Net budget authority and outlays:
89.00 Budget authority..................
90.00 Outlays...........................        -146         -75        -126
---------------------------------------------------------------------------

                 Summary of Budget Authority and Outlays

                        (in millions of dollars)

                                     1996 actual  1997 est.   1998 est.
Enacted/requested:
  Budget Authority..................
  Outlays...........................        -146         -75        -126
Legislative proposal, subject to 
    PAYGO:
  Budget Authority..................
  Outlays...........................                                -127
                                    ------------------------------------
Total:
  Budget Authority..................
  Outlays...........................        -146         -75        -253
                                    ====================================

               Status of Direct Loans (in millions of dollars)

----------------------------------------------------------------------------
Identification code 36-4258-0-3-704      1996 actual   1997 est.   1998 est.
----------------------------------------------------------------------------
    Cumulative balance of direct loans 
                outstanding:
1210  Outstanding, start of year........         555         449         413
1231  Disbursements: Direct loan 
        disbursements...................          38          31          28
      Repayments:

1251    Repayments and prepayments......         -49         -40         -36
1253    Proceeds from loan asset sales 
          to the public with recourse...         -30         -24         -22
      Adjustments:

1261    Capitalized interest............           5
1262    Discount on loan asset sales to 
          the public or discounted......          -2          -1          -1
      Write-offs for default:

1263    Direct loans....................          -2          -2          -2
1264    Other adjustments, net..........         -66
                                           ---------   ---------  ----------
1290    Outstanding, end of year........         449         413         380
---------------------------------------------------------------------------

             Status of Guaranteed Loans (in millions of dollars)

----------------------------------------------------------------------------
Identification code 36-4258-0-3-704      1996 actual   1997 est.   1998 est.
----------------------------------------------------------------------------
    Cumulative balance of guaranteed loans 
                outstanding:
2210  Outstanding, start of year........      32,345      24,731      18,659
2251  Repayments and prepayments........      -6,793      -5,194      -3,919
      Adjustments:

2262    Terminations for default that 
          result in acquisition of 
          property......................        -608        -675        -565
2263    Terminations for default that 
          result in claim payments......        -216        -203        -170
2264    Other adjustments, net..........           3
                                           ---------   ---------  ----------
2290    Outstanding, end of year........      24,731      18,659      14,005
----------------------------------------------------------------------------

    Memorandum:
2299  Guaranteed amount of guaranteed 
        loans outstanding, end of year..      13,886      10,476       7,864
----------------------------------------------------------------------------

    Addendum:
      Cumulative balance of defaulted guaranteed 
          loans that result in loans receivable:

2310    Outstanding, start of year......       1,518       1,350       1,206
2331    Disbursements for guaranteed 
          loan claims...................         258         220         187
2351    Repayments of loans receivable..         -87         -36         -27
2361    Write-offs of loans receivable..        -339        -328        -141
                                           ---------   ---------  ----------
2390      Outstanding, end of year......       1,350       1,206       1,225
---------------------------------------------------------------------------

                        Statement of Operations (in millions of dollars)

-----------------------------------------------------------------------------------------------
Identification code   36-4258-0-3-704    1995 actual    1996 actual     1997 est.      1998 est.
-----------------------------------------------------------------------------------------------
0101  Revenue...........................         563            869           695            556
0102  Expense...........................        -446           -441          -353           -282
                                        ------------ --------------  ------------  -------------
0109  Net income or loss (-)............         117            428           342            274
-----------------------------------------------------------------------------------------------

                             Balance Sheet (in millions of dollars)

-----------------------------------------------------------------------------------------------
Identification code   36-4258-0-3-704    1995 actual    1996 actual     1997 est.      1998 est.
-----------------------------------------------------------------------------------------------
    ASSETS:
1101  Federal assets: Fund balances with 
        Treasury........................         914            238           264            137
1207  Non-Federal assets: Advances and 
        prepayments.....................                          1
      Net value of assets related to 
          post-1991 direct loans 
          receivable:

1402    Interest receivable.............                          7            51             41
1403    Accounts receivable from 
          foreclosed property...........         890            463           203            170
                                        ------------ --------------  ------------  -------------
1499      Net present value of assets 
            related to direct loans.....         890            470           254            211
1706  Net value of assets related to 
        pre-1992 direct loans receivable 
        and acquired defaulted 
        guaranteed loans receivable: 
        Foreclosed property.............          40
      Other Federal assets:

1803    Property, plant and equipment, 
          net...........................         444            643           655            530
1901    Other assets....................         -84
                                        ------------ --------------  ------------  -------------
1999    Total assets....................       2,204          1,352         1,173            878
    LIABILITIES:
2101  Federal liabilities: Accounts 
        payable.........................          93            293           249            211
2207  Non-Federal liabilities: Other....         747             76            66             50
                                        ------------ --------------  ------------  -------------
2999    Total liabilities...............         840            369           315            261
    NET POSITION:
3200  Invested capital..................       1,284          1,106           941            799
3300  Cumulative results of operations..         827            169           -83           -183
3500  Future funding requirements.......        -747           -292
                                        ------------ --------------  ------------  -------------
3999    Total net position..............       1,364            983           858            616
                                        ------------ --------------  ------------  -------------
4999  Total liabilities and net position       2,204          1,352         1,173            877
-----------------------------------------------------------------------------------------------

                                <F-dash>

        Veterans Housing Benefit Program Fund Liquidating Account

                (Legislative proposals, subject to PAYGO)

               Program and Financing (in millions of dollars)

----------------------------------------------------------------------------
Identification code 36-4258-4-3-704      1996 actual   1997 est.   1998 est.
----------------------------------------------------------------------------

    Obligations by program activity:
      Capital investment:

00.04   Payment to DLFA due to debt 
          collection....................                                  43
                                           ---------   ---------  ----------
02.93   Claims-Individual Homes.........                                  43
                                           ---------   ---------  ----------
10.00   Total obligations (object class 
          33.0).........................                                  43
----------------------------------------------------------------------------

    Budgetary resources available for obligation:
22.00 New budget authority (gross)......                                 170
22.40 Capital transfer to general fund..                                -126
                                           ---------   ---------  ----------
23.90   Total budgetary resources 
          available for obligation......                                  44
23.95 New obligations...................                                 -43
----------------------------------------------------------------------------

[[Page 913]]



    New budget authority (gross), detail:
68.00 Spending authority from offsetting 
        collections (gross): Offsetting 
        collections (cash)..............                                 170
----------------------------------------------------------------------------

    Change in unpaid obligations:
72.90 Unpaid obligations, start of year: 
        Obligated balance: Fund balance.
73.10 New obligations...................                                  43
73.20 Total outlays (gross).............                                 -43
74.90 Unpaid obligations, end of year: 
        Obligated balance: Fund balance.                                   2
----------------------------------------------------------------------------

    Outlays (gross), detail:
86.97 Outlays from new permanent 
        authority.......................                                  43
86.98 Outlays from permanent balances...
                                           ---------   ---------  ----------
87.00   Total outlays (gross)...........                                  43
----------------------------------------------------------------------------

    Offsets:
      Against gross budget authority and outlays:

        Offsetting collections (cash) 
            from:
          Non-Federal sources:
88.40       Payment from DLFA due to 
              debt collection...........                                -127
88.40       Collection of claims 
              (veteran indebtedness)....                                 -43
                                           ---------   ---------  ----------
88.90       Total, offsetting 
              collections (cash)........                                -170
----------------------------------------------------------------------------

    Net budget authority and outlays:
89.00 Budget authority..................
90.00 Outlays...........................                                -127
---------------------------------------------------------------------------

    This schedule shows the effects of the Administration's proposal to 
repeal restrictions on collection of loan guaranty debts. VA would be 
permitted to collect all loan guaranty debts by Federal salary offset or 
Federal income tax refund offset.

                     [Loan Guaranty Program Account]

                     [(including transfer of funds)]

    [For the cost of direct and guaranteed loans, such sums as may be 
necessary to carry out the program, as authorized by 38 U.S.C. chapter 
37, as amended: Provided, That such costs, including the cost of 
modifying such loans, shall be as defined in section 502 of the 
Congressional Budget Act of 1974, as amended.]
    [In addition, for administrative expenses to carry out the direct 
and guaranteed loan programs, $33,810,000, which may be transferred to 
and merged with the appropriation for ``General operating expenses''.] 
(Departments of Veterans Affairs and Housing and Urban Development, and 
Independent Agencies Appropriations Act, 1997.)

              [Loan Guaranty Direct Loan Financing Account]

                      [Direct Loan Program Account]

                     [(including transfer of funds)]

    [For the cost of direct loans, such sums as may be necessary to 
carry out the program, as authorized by 38 U.S.C. chapter 37, as 
amended: Provided, That such costs, including the cost of modifying such 
loans, shall be as defined in section 502 of the Congressional Budget 
Act of 1974, as amended; Provided further, That during 1997, within the 
resources available, not to exceed $300,000 in gross obligations for 
direct loans are authorized for specially adapted housing loans.]
    [In addition, for administrative expenses to carry out the direct 
loan program, $80,000, which may be transferred to and merged with the 
appropriation for ``General operating expenses''.] (Departments of 
Veterans Affairs and Housing and Urban Development, and Independent 
Agencies Appropriations Act, 1997.)

                                <F-dash>

        Miscellaneous Veterans Programs Loan Fund Program Account

         [Native American Veteran Housing Loan Program Account]

                      (including transfer of funds)

    For administrative expenses to carry out the direct loan program 
authorized by 38 U.S.C. chapter 37, subchapter V, as amended, [$205,000] 
$515,000, which may be transferred to and merged with the appropriation 
for ``General operating expenses''. (Departments of Veterans Affairs and 
Housing and Urban Development, and Independent Agencies Appropriations 
Act, 1997.)

            [Vocational Rehabilitation Loans Program Account]

                     [(including transfer of funds)]

    For the cost of direct loans, [$49,000] $44,000,  as authorized by 
38 U.S.C. chapter 31, as amended: Provided, That such costs, including 
the cost of modifying such loans, shall be as defined in section 502 of 
the Congressional Budget Act of 1974, as amended: Provided further, That 
these funds are available to subsidize gross obligations for the 
principal amount of direct loans not to exceed [$2,822,000] $2,278,000.
    In addition, for administrative expenses necessary to carry out the 
direct loan program, [$377,000] $388,000, which may be transferred to 
and merged with the appropriation for ``General operating expenses''. 
(Departments of Veterans Affairs and Housing and Urban Development, and 
Independent Agencies Appropriations Act, 1997.)

                  [Education Loan Fund Program Account]

                     [(including transfer of funds)]

    For the cost of direct loans, $1,000, as authorized by 38 U.S.C. 
3698, as amended: Provided, That such costs, including the cost of 
modifying such loans, shall be as defined in section 502 of the 
Congressional Budget Act of 1974, as amended: Provided further, That 
these funds are available to subsidize gross obligations for the 
principal amount of direct loans not to exceed $3,000.
    In addition, for administrative expenses necessary to carry out the 
direct loan program, [$195,000] $200,000; which may be transferred to 
and merged with the appropriation for ``General operating expenses''. 
(Departments of Veterans Affairs and Housing and Urban Development, and 
Independent Agencies Appropriations Act, 1997.)

                                <F-dash>

               Program and Financing (in millions of dollars)

----------------------------------------------------------------------------
Identification code 36-0140-0-3-702      1996 actual   1997 est.   1998 est.
----------------------------------------------------------------------------

    Obligations by program activity:
00.01 Direct loan subsidy...............           1           1           1
00.09 Administrative expenses...........           1           1           1
                                           ---------   ---------  ----------
10.00   Total obligations...............           2           2           2
----------------------------------------------------------------------------

    Budgetary resources available for obligation:
21.40 Unobligated balance available, 
        start of year: Uninvested 
        balance.........................           4           3           2
22.00 New budget authority (gross)......           1           1           1
                                           ---------   ---------  ----------
23.90   Total budgetary resources 
          available for obligation......           5           4           3
23.95 New obligations...................          -2          -2          -2
24.40 Unobligated balance available, end 
        of year: Uninvested balance.....           3           2
----------------------------------------------------------------------------

    New budget authority (gross), detail:
40.00 Appropriation.....................           1           1           1
----------------------------------------------------------------------------

    Change in unpaid obligations:
73.10 New obligations...................           2           2           2
73.20 Total outlays (gross).............          -2          -2          -2
----------------------------------------------------------------------------

    Outlays (gross), detail:
86.90 Outlays from new current authority           1           1           1
86.93 Outlays from current balances.....           1           1           1
                                           ---------   ---------  ----------
87.00   Total outlays (gross)...........           2           2           2
----------------------------------------------------------------------------

    Net budget authority and outlays:
89.00 Budget authority..................           1           1           1
90.00 Outlays...........................           1           2           2
---------------------------------------------------------------------------

Summary of Loan Levels, Subsidy Budget Authority and Outlays by Program (in 
                            millions of dollars)

----------------------------------------------------------------------------
Identification code 36-0140-0-3-702      1996 actual   1997 est.   1998 est.
----------------------------------------------------------------------------
    Direct loan levels supportable by subsidy 
                budget authority:
1150  Direct loan levels, Vocational 
        Rehabiliation...................           2           3           3
1150  Direct loan levels, Native 
        American Housing................           6          12          14
                                           ---------   ---------  ----------
1159    Total direct loan levels........           8          15          17
    Direct loan subsidy (in percent):
1320  Voc. Rehab. Loan Subsidy rate.....        2.78        2.03        1.94

[[Page 914]]

1320  Education Loan Subsidy rate.......        0.00       42.94       34.11
1320  Native American Subsidy rate......        7.72        7.72        7.72
                                           ---------   ---------  ----------
1329    Weighted average subsidy rate...        6.62        6.78        6.99
    Direct loan subsidy budget authority:
1330  Subsidy budget authority, Native 
        American........................           1           1           1
                                           ---------   ---------  ----------
1339    Total subsidy budget authority..           1           1           1
    Direct loan subsidy outlays:
1340  Subsidy outlays, Native American..           1           1           1
                                           ---------   ---------  ----------
1349    Total subsidy outlays...........           1           1           1
----------------------------------------------------------------------------

    Administrative expense data:
3510  Budget authority..................           1           1           1
3590  Outlays...........................           1           1           1
---------------------------------------------------------------------------

    All information from the Native American Veterans Home Loan Fund, 
Vocational Rehabilitation Loan Program and Education Loan Fund is 
consolidated in a single housing fund called the Miscellaneous Veterans 
Programs Loan Fund.

    The Native American Veterans Housing Loan program provides direct 
loans to veterans living on trust lands under 38 U.S.C. chapter 37, 
section 3761. These loans are available to purchase, construct or 
improve homes to be occupied as the veteran's residence. The principal 
amount of a loan under this authority is generally limited to $80,000, 
except in areas where housing costs are significantly higher than 
average costs nationwide. The Native American Veterans Housing Loan 
Program is a five-year pilot program beginning in 1993. This submission 
assumes the enactment of the proposal to extend the Native American 
Program for two additional years through 1999.

    The Vocational Rehabilitation Loan Fund provides loans of up to $815 
(based on indexed Chapter 31 Subsistence allowance rate) to veterans 
enrolled in a program of vocational rehabilitation who are temporarily 
in need of additional funds to meet their expenses.

    The Education Loan program provides loans of up to $2,500 to 
dependents of veterans who are eligible for training benefits under 
chapter 35, title 38, U.S.C. and who are without sufficient funds to 
meet their education related expenses.

    As required by the Federal Credit Reform Act of 1990, this account 
records, for these programs, the subsidy costs associated with the 
direct loans obligated in 1992 and beyond, as well as the administrative 
expenses of these programs. The subsidy amounts are estimated on a 
present value basis; the administrative expenses are estimated on a cash 
basis. 

               Object Classification (in millions of dollars)

----------------------------------------------------------------------------
Identification code 36-0140-0-3-702      1996 actual   1997 est.   1998 est.
----------------------------------------------------------------------------
25.3  Purchases of goods and services 
        from Government accounts........           1           1           1
41.0  Grants, subsidies, and 
        contributions...................           1           1           1
                                           ---------   ---------  ----------
99.9    Total obligations...............           2           2           2
---------------------------------------------------------------------------

                                <F-dash>

 Miscellaneous Veterans Programs Loan Fund Direct Loan Financing Account

               Program and Financing (in millions of dollars)

----------------------------------------------------------------------------
Identification code 36-4259-0-3-702      1996 actual   1997 est.   1998 est.
----------------------------------------------------------------------------

    Obligations by program activity:
00.01 Direct loans......................           8          15          17
00.02 Interest on Treasury borrowing....           2           1           1
                                           ---------   ---------  ----------
10.00   Total obligations...............          10          16          18
----------------------------------------------------------------------------

    Budgetary resources available for obligation:
21.40 Unobligated balance available, 
        start of year: Uninvested 
        balance.........................           1           2
22.00 New financing authority (gross)...          11          16          19
                                           ---------   ---------  ----------
23.90   Total budgetary resources 
          available for obligation......          12          18          19
23.95 New obligations...................         -10         -16         -18
24.40 Unobligated balance available, end 
        of year: Uninvested balance.....           2
----------------------------------------------------------------------------

    New financing authority (gross), detail:
67.15 Authority to borrow (indefinite)..           8          14          16
      Spending authority from offsetting 
          collections:

68.00   Offsetting collections (cash)...           5           6           6
68.47   Portion applied to debt 
          reduction.....................          -2          -4          -4
                                           ---------   ---------  ----------
68.90     Spending authority from 
            offsetting collections 
            (total).....................           3           2           2
                                           ---------   ---------  ----------
70.00   Total new financing authority 
          (gross).......................          11          16          18
----------------------------------------------------------------------------

    Change in unpaid obligations:
72.40 Unpaid obligations, start of year: 
        Obligated balance: Appropriation           1           1           1
73.10 New obligations...................          10          16          18
73.20 Total financing disbursements 
        (gross).........................         -10         -16         -19
74.40 Unpaid obligations, end of year: 
        Obligated balance: Appropriation           1           1
87.00 Total financing disbursements 
        (gross).........................          10          16          19
----------------------------------------------------------------------------

    Offsets:
      Against gross financing authority and 
          financing disbursements:

        Offsetting collections (cash) 
            from:
88.00     Federal sources...............          -1          -1          -1
          Non-Federal sources:
88.40       Non-Federal sources.........          -2          -3          -2
88.40       Interest on loans...........          -1          -2          -3
88.40       Interest on uninvested funds          -1
                                           ---------   ---------  ----------
88.90       Total, offsetting 
              collections (cash)........          -5          -6          -6
----------------------------------------------------------------------------

    Net financing authority and financing 
        disbursements:
89.00 Financing authority...............           6          10          13
90.00 Financing disbursements...........           5          10          13
---------------------------------------------------------------------------

               Status of Direct Loans (in millions of dollars)

----------------------------------------------------------------------------
Identification code 36-4259-0-3-702      1996 actual   1997 est.   1998 est.
----------------------------------------------------------------------------
    Position with respect to appropriations act 
                limitation on obligations:
1111  Limitation on direct loans........           8          15          17
                                           ---------   ---------  ----------
1150    Total direct loan obligations...           8          15          17
----------------------------------------------------------------------------

    Cumulative balance of direct loans 
                outstanding:
1210  Outstanding, start of year........           7          13          26
1231  Disbursements: Direct loan 
        disbursements...................           8          15          17
1251  Repayments: Repayments and 
        prepayments.....................          -3          -3          -2
1264  Write-offs for default: Other 
        adjustments, net................           1           1
                                           ---------   ---------  ----------
1290    Outstanding, end of year........          13          26          41
---------------------------------------------------------------------------

[[Page 915]]



                             Balance Sheet (in millions of dollars)

-----------------------------------------------------------------------------------------------
Identification code   36-4259-0-3-702    1995 actual    1996 actual     1997 est.      1998 est.
-----------------------------------------------------------------------------------------------
    ASSETS:
1101  Federal assets: Fund balances with 
        Treasury........................           4              3             1              1
      Net value of assets related to 
          post-1991 direct loans 
          receivable:

1401    Direct loans receivable, gross..           1             13            26             41
                                        ------------ --------------  ------------  -------------
1499      Net present value of assets 
            related to direct loans.....           1             13            26             41
                                        ------------ --------------  ------------  -------------
1999    Total assets....................           5             16            27             42
    LIABILITIES:
      Federal liabilities:

2101    Accounts payable................
2103    Debt............................           2              3             2              2
2104    Resources payable to Treasury...                                       10             23
2203  Non-Federal liabilities: Debt.....           1             13
                                        ------------ --------------  ------------  -------------
2999    Total liabilities...............           3             16            12             25
    NET POSITION:
3100  Appropriated capital..............                                       14             17
                                        ------------ --------------  ------------  -------------
3999    Total net position..............                                       14             17
                                        ------------ --------------  ------------  -------------
4999  Total liabilities and net position           3             16            26             42
-----------------------------------------------------------------------------------------------

    This account contains all information on the Native American 
Veterans Home Loan Fund, Vocational Rehabilitation Loan Program 
Education Loan Fund, and Transitional Housing Financing Account.

    As required by the Federal Credit Reform Act of 1990, this non-
budgetary account records all cash flows to and from the Government 
resulting from direct loans obligated in 1992 and beyond. The amounts in 
the account are means of financing and are not included in the budget 
totals.

                                <F-dash>

      Miscellaneous Veterans Programs Loan Fund Liquidating Account

               Status of Direct Loans (in millions of dollars)

----------------------------------------------------------------------------
Identification code 36-4260-0-3-702      1996 actual   1997 est.   1998 est.
----------------------------------------------------------------------------
    Cumulative balance of direct loans 
                outstanding:
1210  Outstanding, start of year........           3           3           2
                                           ---------   ---------  ----------
1290    Outstanding, end of year........           3           2           2
---------------------------------------------------------------------------

                             Balance Sheet (in millions of dollars)

-----------------------------------------------------------------------------------------------
Identification code   36-4260-0-3-702    1995 actual    1996 actual     1997 est.      1998 est.
-----------------------------------------------------------------------------------------------
    ASSETS:
1101  Federal assets: Fund balances with 
        Treasury........................                          1
      Net value of assets related to 
          pre-1992 direct loans 
          receivable and acquired 
          defaulted guaranteed loans 
          receivable:

1601    Direct loans, gross.............           3              3             2              2
1603    Allowance for estimated 
          uncollectible loans and 
          interest (-)..................          -2             -2            -1
1604    Direct loans and interest 
          receivable, net...............           1              1             1              2
                                        ------------ --------------  ------------  -------------
1699      Value of assets related to 
            direct loans................           1              1             1              2
                                        ------------ --------------  ------------  -------------
1999    Total assets....................           1              2             1              2
    NET POSITION:
3100  Appropriated capital..............           8              1
3300  Cumulative results of operations..          -7              1             1              2
                                        ------------ --------------  ------------  -------------
3999    Total net position..............           1              1             1
                                        ------------ --------------  ------------  -------------
4999  Total liabilities and net position           1              2             1              2
-----------------------------------------------------------------------------------------------

    This account contains all information on the Vocational 
Rehabilitation Loan Program and Education Loan Fund on loans prior to 
1992.

    As required by the Federal Credit Reform Act of 1990, this account 
records all cash flows to and from the Government resulting from direct 
loans obligated prior to 1992. All new activity in this program in 1992 
and beyond is recorded in corresponding program and financing acounts.

                   WORKLOAD, AMOUNT LOANED AND REPAID

                                     1996 actual  1997 est.   1998 est.
Number of loans outstanding.........       3,142       2,700       2,340
Average amount per loan outstanding.        $831        $849        $855

                                <F-dash>

  

                               Trust Funds

               Post-Vietnam Era Veterans Education Account

              Unavailable Collections (in millions of dollars)

----------------------------------------------------------------------------
Identification code 36-8133-0-7-702      1996 actual   1997 est.   1998 est.
----------------------------------------------------------------------------
    Balance, start of year:
01.99 Balance, start of year............          64          64          64
    Receipts:
02.01 Deductions from military pay......           4           4
02.02 Contributions.....................          12          15          11
                                           ---------   ---------  ----------
02.99   Total receipts..................          16          19          11
                                           ---------   ---------  ----------
04.00 Total: Balances and collections...          80          83          75
    Appropriation:
05.01 Post-Vietnam era veterans 
        education account...............         -16         -19         -11
                                           ---------   ---------  ----------
05.99 Subtotal appropriation............         -16         -19         -11
07.99 Total balance, end of year........          64          64          64
---------------------------------------------------------------------------

               Program and Financing (in millions of dollars)

----------------------------------------------------------------------------
Identification code 36-8133-0-7-702      1996 actual   1997 est.   1998 est.
----------------------------------------------------------------------------

    Obligations by program activity:
00.01 Payment to post-Vietnam era 
        trainees........................          28          18          14
00.02 Payment to section 901 trainees...           1           1
00.03 Participant disenrollments........          24          81          28
                                           ---------   ---------  ----------
10.00   Total obligations...............          53         100          42
----------------------------------------------------------------------------

    Budgetary resources available for obligation:
21.40 Unobligated balance available, 
        start of year: Uninvested 
        balance.........................         226         189         108
22.00 New budget authority (gross)......          16          19          11
                                           ---------   ---------  ----------
23.90   Total budgetary resources 
          available for obligation......         242         208         108
23.95 New obligations...................         -53        -100         -42
24.40 Unobligated balance available, end 
        of year: Uninvested balance.....         189         108          77
----------------------------------------------------------------------------

    New budget authority (gross), detail:
60.27 Appropriation (trust fund, 
        indefinite).....................          20          23          11
60.45 Portion precluded from obligation.          -4          -4
                                           ---------   ---------  ----------
63.00   Appropriation (total)...........          16          19          11
                                           ---------   ---------  ----------
70.00   Total new budget authority 
          (gross).......................          16          19          11
----------------------------------------------------------------------------

    Change in unpaid obligations:
72.40 Unpaid obligations, start of year: 
        Obligated balance: Appropriation          -6           4           5
73.10 New obligations...................          53         100          42
73.20 Total outlays (gross).............         -43         -99         -44
74.40 Unpaid obligations, end of year: 
        Obligated balance: Appropriation           4           5           3
----------------------------------------------------------------------------

    Outlays (gross), detail:
86.97 Outlays from new permanent 
        authority.......................          16          19          11
86.98 Outlays from permanent balances...          27          80          33
                                           ---------   ---------  ----------
87.00   Total outlays (gross)...........          43          99          44
----------------------------------------------------------------------------

    Net budget authority and outlays:
89.00 Budget authority..................          16          19          11
90.00 Outlays...........................          43          99          44
---------------------------------------------------------------------------

    This account consists of voluntary contributions by eligible 
servicepersons and matching contributions provided by the

[[Page 916]]

Department of Defense. The fund provides educational assistance payments 
to participants who entered the service after December 31, 1976, and are 
pursuing training under chapter 32, title 38, U.S.C. Section 901 is a 
non-contributory program with educational assistance provided by the 
Department of Defense. Public Law 99-576, enacted October 28, 1986, 
closed the program permanently for new enrollments effective March 31, 
1987. The estimated activity in the fund follows:

    CONTRIBUTIONS, PARTICIPANTS, DISENROLLMENTS, REFUNDS AND TRAINEES

                        [In millions of dollars]

                                     1996 actual  1997 est.   1998 est.

Total budget authority..............         $15         $19         $11
  Servicepersons....................          $4          $4
  Transferred from Department of 
    Defense (bonus).................                       7           5
  Transferred from Department of 
    Defense (matching)..............          10           8           6
  Transferred from Department of 
    Defense (Section 901)...........           1           1
  Transferred from Department of 
    Defense (Section 903)...........
Total participants (end of year)....     341,439     223,442     164,342
Total contributors (end of year)....       3,611       4,300
Average contribution per contributor 
(actual dollars)....................      $1,028      $1,028
Number of disenrollments............      14,150     117,997      59,100
Total refunds.......................         $24         $81         $28
Total trainees......................      14,002       9,154       6,778
Total trainee cost..................         $28         $18         $14
Average cost per trainee (actual 
dollars)............................      $1,994      $1,994      $1,994
Section 901 trainees................         183         144         113
Section 901 trainee cost............          $1          $1

               Object Classification (in millions of dollars)

----------------------------------------------------------------------------
Identification code 36-8133-0-7-702      1996 actual   1997 est.   1998 est.
----------------------------------------------------------------------------
41.0  Grants, subsidies, and 
        contributions...................          29          19          14
44.0  Refunds...........................          24          81          28
                                           ---------   ---------  ----------
99.9    Total obligations...............          53         100          42
---------------------------------------------------------------------------

                                <F-dash>

                  National Service Life Insurance Fund

              Unavailable Collections (in millions of dollars)

----------------------------------------------------------------------------
Identification code 36-8132-0-7-701      1996 actual   1997 est.   1998 est.
----------------------------------------------------------------------------
    Balance, start of year:
01.99 Balance, start of year............                                  30
    Receipts:
02.01 Premium and other receipts........         236         256         216
02.02 Interest..........................       1,050       1,002         965
02.03 Payments from general and special 
        funds...........................           2           2           2
                                           ---------   ---------  ----------
02.99   Total receipts..................       1,288       1,260       1,183
                                           ---------   ---------  ----------
04.00 Total: Balances and collections...       1,288       1,260       1,213
    Appropriation:
05.01 National Service Life Insurance 
        fund............................      -1,288      -1,230      -1,182
07.99 Total balance, end of year........                      30          31
---------------------------------------------------------------------------

               Program and Financing (in millions of dollars)

----------------------------------------------------------------------------
Identification code 36-8132-0-7-701      1996 actual   1997 est.   1998 est.
----------------------------------------------------------------------------

    Obligations by program activity:
      Direct:

        Operating expenses:
00.01     Death claims..................         546         591         622
00.02     Disability claims.............          20          20          21
00.03     Matured endowments............          25          20          13
00.04     Cash surrenders...............          24          15          20
00.05     Dividends.....................         535         509         493
00.06     Interest paid on dividend 
            credits and deposits........          55          57          59
00.07     Payment to general operating 
            expenses....................          19          20          22
                                           ---------   ---------  ----------
00.91       Total operating expenses....       1,224       1,232       1,250
      Capital investment:

02.01   Policy loans....................         132         128         131
                                           ---------   ---------  ----------
02.93   Total direct obligations........       1,356       1,360       1,381
      Reimbursable program:

03.01   Death claims....................         245         253         254
03.02   Disability claims...............           9           9           8
03.03   Matured endowments..............          11           9           6
03.04   Cash surrenders.................          11           7           8
03.05   Dividends.......................         240         218         202
03.06   Interest paid on dividend 
          credits and deposits..........          25          24          24
03.07   Payment to general operating 
          expenses......................           9           8           9
                                           ---------   ---------  ----------
03.91     Total reimbursable............         550         528         511
                                           ---------   ---------  ----------
10.00   Total obligations...............       1,906       1,888       1,892
----------------------------------------------------------------------------

    Budgetary resources available for obligation:
21.91 Unobligated balance available, 
        start of year: U.S. Securities: 
        Par value.......................      10,854      10,824      10,729
22.00 New budget authority (gross)......       1,877       1,794       1,727
                                           ---------   ---------  ----------
23.90   Total budgetary resources 
          available for obligation......      12,731      12,618      12,456
23.95 New obligations...................      -1,906      -1,888      -1,892
24.91 Unobligated balance available, end 
        of year: U.S. Securities: Par 
        value...........................      10,824      10,729      10,564
----------------------------------------------------------------------------

    New budget authority (gross), detail:
60.27 Appropriation (trust fund, 
        indefinite).....................       1,288       1,230       1,182
68.00 Spending authority from offsetting 
        collections: Offsetting 
        collections (cash)..............         589         564         545
                                           ---------   ---------  ----------
70.00   Total new budget authority 
          (gross).......................       1,877       1,794       1,727
----------------------------------------------------------------------------

    Change in unpaid obligations:
      Unpaid obligations, start of year:

        Obligated balance:
72.40     Appropriation.................          10           5           5
72.41     U.S. Securities: Par value....       1,101       1,183       1,185
                                           ---------   ---------  ----------
72.99     Total unpaid obligations, 
            start of year...............       1,111       1,188       1,190
73.10 New obligations...................       1,906       1,888       1,892
73.20 Total outlays (gross).............      -1,829      -1,887      -1,849
      Unpaid obligations, end of year:

        Obligated balance:
74.40     Appropriation.................           5           5           5
74.41     U.S. Securities: Par value....       1,183       1,185       1,228
                                           ---------   ---------  ----------
74.99     Total unpaid obligations, end 
            of year.....................       1,188       1,190       1,233
----------------------------------------------------------------------------

    Outlays (gross), detail:
86.97 Outlays from new permanent 
        authority.......................         589         564         545
86.98 Outlays from permanent balances...       1,240       1,323       1,304
                                           ---------   ---------  ----------
87.00   Total outlays (gross)...........       1,829       1,887       1,849
----------------------------------------------------------------------------

    Offsets:
      Against gross budget authority and outlays:

        Offsetting collections (cash) 
            from:
          Non-Federal sources:
88.40       Repayments of loans.........        -126        -120        -122
88.40       Optional settlements........          -7          -6          -5
88.40       Net income offsets 
              adjustments...............        -456        -438        -418
                                           ---------   ---------  ----------
88.90       Total, offsetting 
              collections (cash)........        -589        -564        -545
----------------------------------------------------------------------------

    Net budget authority and outlays:
89.00 Budget authority..................       1,288       1,230       1,182
90.00 Outlays...........................       1,240       1,323       1,304
---------------------------------------------------------------------------
    Note.--The Department of Veterans Affairs insurance policy loans are 
not an extension of Federal credit. Credit schedules previously shown 
for this account have been discontinued.

    This fund was established in 1940 for the World War II servicemen's 
and veterans' insurance program. Over 22 million policies have been 
issued under this program. Activity of the fund reflects a rising claim 
workload. The trend in the number and amount of policies in force is 
shown as follows (dollars in millions):

                                         1995 actual   1996 est.   1997 est.

Number of policies......................   2,120,348   2,019,328   1,913,028
Insurance in force......................     $19,365     $18,851     $18,299

    This fund is operated on a commercial basis to the extent possible. 
The income of the fund is derived from premium receipts, interest on 
investments, and payments which are made to the fund from the Veterans 
insurance and indemnities appropriation.

    Assets of the fund, which are largely invested in special Treasury 
interest-bearing securities and in policy loans, are

[[Page 917]]

expected to decrease from $12,947 million as of September 30, 1997 to 
$12,823 million as of September 30, 1998. The actuarial estimate of 
policy obligations as of September 30, 1998, total $12,730 million, 
leaving a balance of $93 million for contingency reserves.

    The status of the fund, excluding noncash transactions, is as 
follows (in millions of dollars):

                  Status of Funds (in millions of dollars)

----------------------------------------------------------------------------
Identification code 36-8132-0-7-701      1996 actual   1997 est.   1998 est.
----------------------------------------------------------------------------
    Unexpended balance, start of year:
0100  Uninvested balance [unavailable 
        collections]....................          10           5          35
0101  U.S. Securities: Par value........      11,954      12,007      11,914
                                           ---------   ---------  ----------
0199    Total balance, start of year....      11,964      12,012      11,949
    Cash income during the year:
      Proprietary receipts:

0220    NSLI fund, Premium and other 
          receipts......................         236         256         216
      Intragovernmental transactions:

0240    NSLI fund, Interest.............       1,050       1,002         965
0241    NSLI fund, Payments from general 
          and special funds.............           2           2           2
      Offsetting collections:

0289    Offsetting Collections..........         589         564         545
                                           ---------   ---------  ----------
0299    Total cash income...............       1,877       1,824       1,728
    Cash outgo during year:
0500  National Service Life Insurance 
        fund............................      -1,829      -1,887      -1,849
    Unexpended balance, end of year:
      Uninvested balance:

0700    Uninvested balance..............           5           5           5
0700    Unavailable Collections.........                      30          31
0701  U.S. Securities: Par value........      12,007      11,914      11,792
                                           ---------   ---------  ----------
0799    Total balance, end of year......      12,012      11,949      11,828
---------------------------------------------------------------------------

               Object Classification (in millions of dollars)

----------------------------------------------------------------------------
Identification code 36-8132-0-7-701      1996 actual   1997 est.   1998 est.
----------------------------------------------------------------------------

      Direct obligations:

33.0    Investments and loans...........          91          90          93
42.0    Insurance claims and indemnities         616         648         677
43.0    Interest and dividends..........         610         586         577
                                           ---------   ---------  ----------
99.0      Subtotal, direct obligations..       1,317       1,324       1,347
99.0  Reimbursable obligations..........         589         564         545
                                           ---------   ---------  ----------
99.9    Total obligations...............       1,906       1,888       1,892
---------------------------------------------------------------------------

                                <F-dash>

              United States Government Life Insurance Fund

              Unavailable Collections (in millions of dollars)

----------------------------------------------------------------------------
Identification code 36-8150-0-7-701      1996 actual   1997 est.   1998 est.
----------------------------------------------------------------------------
    Balance, start of year:
01.99 Balance, start of year............
    Receipts:
02.01 Interest and profits on 
        investments in public debt 
        securities......................           7           7           6
    Appropriation:
05.01 United States government life 
        insurance fund..................          -7          -7          -6
07.99 Total balance, end of year........
---------------------------------------------------------------------------

               Program and Financing (in millions of dollars)

----------------------------------------------------------------------------
Identification code 36-8150-0-7-701      1996 actual   1997 est.   1998 est.
----------------------------------------------------------------------------

    Obligations by program activity:
      Operating expenses:

00.01   Death claims....................           8           7           7
00.03   Matured endowments..............           1           1
00.05   Dividends.......................           6           5           4
00.06   Interest paid on dividend 
          credits and deposits..........           1           1           1
                                           ---------   ---------  ----------
00.91     Total operating expenses......          16          14          12
                                           ---------   ---------  ----------
10.00   Total obligations...............          16          14          12
----------------------------------------------------------------------------

    Budgetary resources available for obligation:
21.91 Unobligated balance available, 
        start of year: U.S. Securities: 
        Par value.......................          87          79          72
22.00 New budget authority (gross)......           9           8           7
                                           ---------   ---------  ----------
23.90   Total budgetary resources 
          available for obligation......          96          87          79
23.95 New obligations...................         -16         -14         -12
24.91 Unobligated balance available, end 
        of year: U.S. Securities: Par 
        value...........................          79          72          66
----------------------------------------------------------------------------

    New budget authority (gross), detail:
60.27 Appropriation (trust fund, 
        indefinite).....................           7           7           6
68.00 Spending authority from offsetting 
        collections: Offsetting 
        collections (cash)..............           2           1           1
                                           ---------   ---------  ----------
70.00   Total new budget authority 
          (gross).......................           9           8           7
----------------------------------------------------------------------------

    Change in unpaid obligations:
72.41 Unpaid obligations, start of year: 
        Obligated balance: U.S. 
        Securities: Par value...........          19          20          19
73.10 New obligations...................          16          14          12
73.20 Total outlays (gross).............         -17         -15         -14
74.41 Unpaid obligations, end of year: 
        Obligated balance: U.S. 
        Securities: Par value...........          20          19          19
----------------------------------------------------------------------------

    Outlays (gross), detail:
86.97 Outlays from new permanent 
        authority.......................           2           1           1
86.98 Outlays from permanent balances...          15          14          13
                                           ---------   ---------  ----------
87.00   Total outlays (gross)...........          17          15          14
----------------------------------------------------------------------------

    Offsets:
      Against gross budget authority and outlays:

88.40   Offsetting collections (cash) 
          from: Repayments of loans.....          -2          -1          -1
----------------------------------------------------------------------------

    Net budget authority and outlays:
89.00 Budget authority..................           7           7           6
90.00 Outlays...........................          15          14          12
---------------------------------------------------------------------------
    Note.--The Department of Veterans Affairs insurance policy loans are 
not an extension of Federal credit. Credit schedules previously shown 
for this account have been discontinued.

    This fund was established in 1919 to receive premiums and pay claims 
on insurance issued under the provisions of the War Risk Insurance Act. 
The general decline in the activity of the fund is indicated in the 
following table (dollars in millions):

                                     1996 actual  1997 est.   1998 est.
Number of policies..................      23,130      21,424      19,838
Insurance in force..................         $77         $71         $65

    The fund is operated on a commercial basis to the extent possible. 
The income of the fund is derived from interest on investments and 
payments from the Veterans insurance and indemnities appropriation. 
Effective January 1, 1983, premiums were discontinued since reserves 
held in the fund were adequate to meet future liabilities of the 
program.

    Assets of the fund, which are largely invested in interest-bearing 
securities and policy loans, are estimated to decrease from $98 million 
as of September 30, 1997, to $91 million as of September 30, 1998, as an 
increasing number of policies mature through death or disability. The 
actuarial evaluation of policy obligations as of September 30, 1998, 
totals $89 million, leaving a balance of $2 million for contingency 
reserves.

    The status of the fund, excluding noncash transactions, is as 
follows (in millions of dollars):

                  Status of Funds (in millions of dollars)

----------------------------------------------------------------------------
Identification code 36-8150-0-7-701      1996 actual   1997 est.   1998 est.
----------------------------------------------------------------------------
    Unexpended balance, start of year:
0101  U.S. Securities: Par value........         106          99          92
    Cash income during the year:
      Intragovernmental transactions:

0240    Interest and profits on 
          investments in public debt 
          securities, USGLI, VA.........           7           7           6
      Offsetting collections:

0289    Offsetting Collections..........           2           1           1
                                           ---------   ---------  ----------

[[Page 918]]


0299    Total cash income...............           9           8           7
    Cash outgo during year:
0500  United States government life 
        insurance fund..................         -17         -15         -14
    Unexpended balance, end of year:
0701  U.S. Securities: Par value........          99          92          85
---------------------------------------------------------------------------

               Object Classification (in millions of dollars)

----------------------------------------------------------------------------
Identification code 36-8150-0-7-701      1996 actual   1997 est.   1998 est.
----------------------------------------------------------------------------
42.0  Insurance claims and indemnities..          10           9           8
43.0  Interest and dividends............           6           5           4
                                           ---------   ---------  ----------
99.9    Total obligations...............          16          14          12
---------------------------------------------------------------------------

                                <F-dash>

                  Veterans Special Life Insurance Fund

               Program and Financing (in millions of dollars)

----------------------------------------------------------------------------
Identification code 36-8455-0-8-701      1996 actual   1997 est.   1998 est.
----------------------------------------------------------------------------

    Obligations by program activity:
      Operating expenses:

00.01   Death claims....................          43          49          53
00.02   Cash surrenders.................           5           5           4
00.03   Dividends.......................         105          99          98
00.04   All other.......................          48          58          61
00.05   Payment to general operating 
          expenses account..............           4           4           5
                                           ---------   ---------  ----------
00.91     Total operating expenses......         205         215         221
01.01 Capital investment................          24          25          25
                                           ---------   ---------  ----------
10.00   Total obligations...............         229         240         246
----------------------------------------------------------------------------

    Budgetary resources available for obligation:
21.91 Unobligated balance available, 
        start of year: U.S. Securities: 
        Par value.......................       1,397       1,412       1,415
22.00 New budget authority (gross)......         244         243         241
                                           ---------   ---------  ----------
23.90   Total budgetary resources 
          available for obligation......       1,641       1,655       1,656
23.95 New obligations...................        -229        -240        -246
24.91 Unobligated balance available, end 
        of year: U.S. Securities: Par 
        value...........................       1,412       1,415       1,410
----------------------------------------------------------------------------

    New budget authority (gross), detail:
68.00 Spending authority from offsetting 
        collections (gross): Offsetting 
        collections (cash)..............         244         243         241
----------------------------------------------------------------------------

    Change in unpaid obligations:
      Unpaid obligations, start of year:

        Obligated balance:
72.90     Fund balance..................           1           1           1
72.91     U.S. Securities: Par value....         150         168         179
                                           ---------   ---------  ----------
72.99     Total unpaid obligations, 
            start of year...............         151         169         180
73.10 New obligations...................         229         240         246
73.20 Total outlays (gross).............        -210        -229        -233
      Unpaid obligations, end of year:

        Obligated balance:
74.90     Fund balance..................           1           1           1
74.91     U.S. Securities: Par value....         168         179         192
                                           ---------   ---------  ----------
74.99     Total unpaid obligations, end 
            of year.....................         169         180         193
----------------------------------------------------------------------------

    Outlays (gross), detail:
86.97 Outlays from new permanent 
        authority.......................          75          68          40
86.98 Outlays from permanent balances...         135         161         193
                                           ---------   ---------  ----------
87.00   Total outlays (gross)...........         210         229         233
----------------------------------------------------------------------------

    Offsets:
      Against gross budget authority and outlays:

        Offsetting collections (cash) 
            from:
88.20     Interest on U.S. securities...        -147        -145        -144
          Non-Federal sources:
88.40       Interest on loans...........          -5          -6          -6
88.40       Insurance premiums earned...         -75         -73         -71
88.40       Optional settlements........          -2          -2          -2
88.40       Repayments of loans.........         -15         -17         -18
                                           ---------   ---------  ----------
88.90       Total, offsetting 
              collections (cash)........        -244        -243        -241
----------------------------------------------------------------------------

    Net budget authority and outlays:
89.00 Budget authority..................
90.00 Outlays...........................         -34         -14          -8
---------------------------------------------------------------------------
    Note.--The Department of Veterans Affairs insurance policy loans are 
not an extension of Federal credit. Credit schedules previously shown 
for this account have been discontinued.

    This fund finances the payment of claims on life insurance policies 
issued before January 3, 1957, to veterans who served in the Armed 
Forces subsequent to April 1, 1951. No new policies can be issued. 
Policyholders may elect to purchase total disability income coverage 
with the payment of additional premiums.

    Budget program--
        Death claims.--Represents payments to designated beneficiaries.
        Cash surrenders.--A policyholder may terminate his or her 
    insurance by cashing in the policy for its cash value.
        Dividends.--Policyholders participate in the distribution of 
    annual dividends.
        All other.--Classified in this category are payments to 
    policyholders who: (a) hold endowment policies which have matured; 
    (b) have purchased total disability income coverage and subsequently 
    become disabled; and (c) are paid interest on dividend credits and 
    deposits.
        The following table reflects the decrease in the number of 
    policies and the amounts of insurance in force (dollars in 
    millions):

                                     1996 actual  1997 est.   1998 est.
  Number of policies................     256,330     249,600     242,870
  Insurance in force................      $2,825      $2,789      $2,760

    Financing.--Payments from this fund are financed primarily  from  
premium  receipts  and  interest  on investments.

    Operating results and financial condition.--Favorable mortality 
experience on insurance written against this fund has kept death claim 
payments well below the amount of premium and interest receipts, thereby 
producing an annual increase in the total revenue of the fund. Excess 
earnings of the fund are now distributed to the policyholders in the 
form of an annual dividend. 

                        Statement of Operations (in millions of dollars)

-----------------------------------------------------------------------------------------------
Identification code   36-8455-0-8-701    1995 actual    1996 actual     1997 est.      1998 est.
-----------------------------------------------------------------------------------------------
0101  Revenue...........................         228            231           229            225
0102  Expense...........................        -226           -223          -229           -225
                                        ------------ --------------  ------------  -------------
0109  Net income or loss (-)............           2              8
-----------------------------------------------------------------------------------------------

                             Balance Sheet (in millions of dollars)

-----------------------------------------------------------------------------------------------
Identification code   36-8455-0-8-701    1995 actual    1996 actual     1997 est.      1998 est.
-----------------------------------------------------------------------------------------------
    ASSETS:
      Federal assets:

1101    Fund balances with Treasury.....           1              1             1              1
        Investments in US securities:
1102      Treasury securities, par......       1,546          1,580         1,594          1,602
1106      Receivables, net..............          94             37            37             36
1206  Non-Federal assets: Receivables, 
        net.............................                                        3              3
1601  Net value of assets related to 
        pre-1992 direct loans receivable 
        and acquired defaulted 
        guaranteed loans receivable: 
        Direct loans, gross.............          37            102           109            117
                                        ------------ --------------  ------------  -------------
1999    Total assets....................       1,678          1,720         1,744          1,759
    LIABILITIES:
      Non-Federal liabilities:

2201    Accounts payable................         168            187           201            214
2206    Pension and other actuarial 
          liabilities...................       1,465          1,481         1,491          1,493
2207    Other...........................          20             19            19             18
                                        ------------ --------------  ------------  -------------
2999    Total liabilities...............       1,652          1,687         1,711          1,725
    NET POSITION:
3100  Appropriated capital..............       1,397          1,412         1,415          1,410

[[Page 919]]

3200  Invested capital..................      -1,370         -1,378        -1,382         -1,378
                                        ------------ --------------  ------------  -------------
3999    Total net position..............          27             34            33             32
                                        ------------ --------------  ------------  -------------
4999  Total liabilities and net position       1,680          1,721         1,744          1,757
-----------------------------------------------------------------------------------------------

               Object Classification (in millions of dollars)

----------------------------------------------------------------------------
Identification code 36-8455-0-8-701      1996 actual   1997 est.   1998 est.
----------------------------------------------------------------------------
33.0  Investments and loans.............          24          25          25
42.0  Insurance claims and indemnities..          85         100         105
43.0  Interest and dividends............         120         115         116
                                           ---------   ---------  ----------
99.9    Total obligations...............         229         240         246
---------------------------------------------------------------------------

                                <F-dash>